How to Navigate HTS Classification During a Tariff War

If you’re an importer in 2025, you know that tariffs don’t just live in headlines. They live in your landed costs, your margin reports, and your CFO’s nightmares.

The tariff rollercoaster is ramping up. With rising geopolitical tensions, renewed Section 301 and 232 actions, and a steady undercurrent of protectionist trade policy, we’re firmly in the era of economic nationalism. And when the pressure’s on, HTS classification becomes much more than a formality. It becomes a battlefield.

Here’s how to protect your business, your compliance posture, and your bottom line.

Why HTS Classification Is Critical in a Volatile Tariff Environment

HTS codes determine more than just what your goods are called at the border. They define your duty rate, whether your imports are subject to Section 301, Section 232, IEEPA, or other punitive tariffs, and whether you qualify for duty exemptions through free trade agreements or other duty reduction programs. In many cases, they also control licensing, labeling, admissibility, and inspection requirements.

When tariffs are in flux and policy is unpredictable, your classification decisions can directly impact profitability. A product misclassified by just one subheading could mean the difference between a 0% duty rate and a 25% tariff under Section 301.  A move in either direction hurts.  Think about why.

What’s Changed and Why You Should Care

The U.S. tariff environment continues to evolve, and for importers, that means increased exposure and fewer assumptions. In recent months, the U.S. Trade Representative has proposed increases in Section 301 duties across a range of critical product categories, including tungsten, wafers, and high-purity silicon. Section 232 tariffs on steel and aluminum remain in force, and the selective application of anti-dumping and countervailing duties continues to affect industries as diverse as electronics, textiles, and manufacturing components.

In addition, the current administration has imposed 25% tariffs on all foreign-made automobiles – a move that disrupts automotive supply chains and impacts manufacturers, distributors, and parts suppliers across North America, Europe, and Asia. Even vehicles assembled in Canada or Mexico under USMCA rules are not entirely immune, as the trade relationship with both neighbors remains strained. Ongoing tariff disputes, including retaliatory duties and disputes over origin and content thresholds, have complicated what were once considered relatively stable trade lanes under the agreement.

As the political climate shifts and tariff policies grow more aggressive and less predictable, HTS classification is a strategic risk management function. Misclassify your product, and you may inadvertently place it under a heading subject to elevated duties or trade remedy measures. Keep using a legacy code without reviewing your product specs or supply chain changes, and you could be overpaying or opening yourself up to audit and enforcement.

In this environment, accurate and defensible classification is critical.

How to Respond Strategically

The first step is to reassess your classifications. Products evolve over time. So do HTSUS interpretations, rulings, and enforcement priorities. If your product has changed even slightly it may no longer belong under the heading you’ve historically used. The same applies if you’ve added new SKUs, changed suppliers, or shifted production to new countries.

A proper classification review should not only verify the accuracy of current codes but evaluate whether more specific, accurate, or defensible classifications are available. It’s not about finding loopholes. It’s about correctly applying the rules in a way that minimizes risk and controls cost.

Language matters in this process. The HTSUS and its supporting notes are legal documents, not product catalogs. Terms like “accessory,” “specially designed for,” or “of a kind used with” carry specific legal interpretations. Many costly classification errors come down to assuming that common-sense language aligns with tariff logic. Unfortunately, it doesn’t.

The Role of Tariff Mitigation

Importers looking to reduce duty exposure should explore legitimate tariff mitigation strategies. These can include tariff engineering to modify the product or how it’s presented for import to meet a different legal classification. In some cases, relocating final assembly or substantial transformation outside of a tariff-impacted country may also allow importers to avoid punitive duties.

Participation in free trade agreements like USMCA or KORUS can significantly reduce or eliminate tariffs, but only if eligibility is properly documented and country-of-origin rules are satisfied. Many companies leave these opportunities on the table simply because they haven’t built FTA review into their classification process.

Using CROSS Rulings and Binding Decisions to Your Advantage

Before finalizing any classification strategy, it’s critical to review CBP’s published rulings through the Customs Rulings Online Search System (CROSS). These rulings provide real-world examples of how CBP has classified products with similar characteristics and offer valuable guidance on how interpretations may apply to your goods.

If your product is novel, complex, or high-risk, consider requesting a binding ruling. This gives you a formal decision from CBP before import, and provides legal certainty, which is especially useful when duty exposure is significant or when your classification decision might be challenged later.

Classification as a Compliance Strategy

Misclassification can lead to significant penalties, retroactive duties, and even allegations of fraud if CBP finds intentional misstatements. And because the importer of record is legally responsible for classification accuracy, you can’t simply rely on your customs broker and hope for the best. Reasonable care is not optional; it’s the legal standard.

Treat classification as a core part of your trade compliance program. It should be subject to internal controls, regular reviews, and clearly documented procedures. During periods of tariff escalation, the companies that proactively manage their classification portfolios are the ones that avoid audit complications and preserve margins.

How O’Meara & Associates Can Help

O’Meara & Associates helps importers navigate complex classification issues, reduce tariff exposure, and prepare for regulatory scrutiny. Whether you need a one-time classification audit, help filing a binding ruling, or ongoing consulting to support your compliance program, our team brings decades of experience in HTSUS interpretation, CBP enforcement trends, and cross-border strategy.

In a trade environment where the rules are shifting and the risks are high, don’t let outdated or uncertain classifications cost you more than they should. Let’s get your classifications right before they get challenged.

Contact us to schedule a classification review or speak with a consultant.