Why AI Tools for Tariff Classification May Lead You Down the Wrong Road

Artificial intelligence (AI) has made remarkable strides in automation, efficiency, and data processing. In many industries, AI tools have improved accuracy and streamlined decision-making, often outperforming human capabilities. However, when it comes to tariff classification, AI’s reliability is, shall we say, debatable.

For businesses engaged in international trade, proper classification under the Harmonized System (HS) Code is not just a regulatory requirement – it’s a financial imperative. The consequences of misclassification range from unexpected duty rates to full-scale compliance investigations. So, while an AI-powered classification tool might seem like an efficient solution, it’s important to recognize its limitations before letting it take the wheel.

AI Is a Great Pattern Matcher, But Tariff Classification Requires Judgment

At its core, AI excels at pattern recognition. It processes vast amounts of historical classification data, identifies trends, and generates recommendations. However, classification isn’t just about matching words. It requires judgment, legal interpretation, and often, a deep understanding of a product’s function and composition.

Consider this: AI might classify a clock-radio as a “clock, with a radio” because that’s what it is called. But from a classification perspective, it is a “radio with a clock.”  So the proper classification is in radio reception devices. If the AI tool is relying solely on a database of prior classifications, it may not consider the regulatory nuances that could place it under a different duty rate or even a separate product category entirely.

AI lacks the ability to apply the General Rules of Interpretation (GRIs) or factor in the ever-evolving legal precedents that drive correct classification. It sees the data; it does not interpret it. And when compliance is on the line, interpretation is everything.

AI Doesn’t Handle Ambiguity Well, But Tariff Classification Is Full of It

The world of tariff classification is rife with gray areas. What happens when a product doesn’t fit neatly into a predefined category? A trade compliance professional knows that, in these cases, research, precedent, and sometimes a binding ruling from customs authorities are necessary to ensure accuracy. AI, on the other hand, will do what it does best – guess.

Take a hybrid product, such as a smartwatch with health monitoring capabilities. Is it a watch? A medical device? A communications tool? Or, depending on your interpretation of trade law, all of the above? AI will select the “most probable” match, which could very well be the wrong match. In classification, there’s no prize for close enough – there’s only compliance or non-compliance.

AI’s Knowledge Is Limited to the Past – Trade Regulations Operate in the Present

One of AI’s greatest weaknesses is its reliance on historical data. It cannot predict regulatory updates, interpret new trade agreements, or account for customs authorities shifting their classification methodologies.

For example, consider the U.S.-China trade dispute and the resulting tariff modifications. Many classification decisions that were valid before became obsolete overnight due to retaliatory tariffs, exclusions, and reclassifications. AI systems trained on past data may not incorporate these changes fast enough, leaving businesses vulnerable to inaccurate duty assessments and compliance risks.

If an AI tool classifies your product under a revised or eliminated HS code, you could face penalties, supply chain disruptions, or worse – a very unpleasant conversation with U.S. Customs and Border Protection (CBP). And no one wants that.

The Cost of Misclassification Far Outweighs the Speed AI Provides

Let’s assume, for a moment, that an AI tool misclassifies your product. What’s the worst that can happen?

• Overpayment of duties: Congratulations, you’re voluntarily giving away money to the government.

• Underpayment of duties: Customs finds out, and suddenly, you’re paying back duties with penalties and interest.

• Product seizures: Because nothing says “supply chain efficiency” like having your goods held at port indefinitely.

• Compliance audits: You’ve made it onto Customs’ radar, and they will now scrutinize everything you do.

AI-powered tools do not assume liability for misclassification. You do. And when customs enforcement comes knocking, “the AI told me so” won’t be a compelling defense.

AI Should Assist, Not Replace, Human Expertise

None of this is to say that AI tools have no place in tariff classification. On the contrary, they can serve as excellent supporting tools—helping compliance teams sift through large datasets, identify potential classifications, and flag discrepancies for further review. But they should never operate without human oversight.

The best approach? A hybrid model, where AI accelerates research and humans provide the interpretation, legal insight, and regulatory awareness necessary to ensure accuracy. Here’s what that looks like:

• AI as a preliminary filter – Use AI tools to generate possible classifications but never accept them at face value.

• Human review of legal notes and rulings – A classification expert must verify whether the AI’s suggestion aligns with GRIs, customs rulings, and industry-specific interpretations.

• Ongoing regulatory monitoring – Trade compliance professionals must stay updated on HS code modifications, tariff adjustments, and enforcement trends, something AI simply cannot do effectively on its own.

• Contact O’Meara & Associates to be your guide. Our HTS Consulting services are your best course to keep you out of trouble and compliant. 

AI Can Help You Move Faster, But It Can Also Lead You Astray

AI tools promise efficiency, and in many cases, they deliver. But in the complex, highly regulated world of tariff classification, speed should never come at the expense of accuracy and compliance. AI can generate suggestions, but it lacks the judgment, adaptability, and legal reasoning required to classify goods with confidence.

For compliance professionals, the message is clear: AI is a tool, not a substitute for expertise. Use it wisely, verify its output, and always trust human oversight when classification decisions carry financial and regulatory consequences. Because when it comes to international trade, the last thing you want is for AI to take you down the wrong road, especially when that road leads to customs penalties.

At O’Meara & Associates, we know that compliance isn’t a guessing game – and neither is tariff classification. Our team of seasoned trade professionals ensures that your products are classified correctly the first time, avoiding costly fines, shipment delays, and regulatory headaches.

Let AI handle the simple stuff, but when it comes to navigating customs compliance, trust the experts.

Contact O’Meara & Associates today to safeguard your supply chain and stay ahead of ever-changing trade regulations.