Customs concepts in the EU and the US: a comparison

1. Classification

Both the EU and the US are based on the international Harmonized System (HS). As a result, the classification up to six digits is the same worldwide. In the EU, the HS is supplemented by the Combined Nomenclature (CN, eight digits) and further specified for imports in TARIC (ten digits). In the US, this national elaboration is done through the Harmonized Tariff Schedule of the United States (HTSUS). From the seventh digit onwards, differences arise: while the EU assigns digits 7–8 to CN and 9–10 to TARIC, the US follows its own path from digit 7. This may result in a different code and sometimes a different description for the same product.

A brief product example illustrates this in a specific case:
Take bicycles (HS heading 8712). A children’s bicycle with wheels of approximately 16 inches is classified in the EU under 8712 00 30 or 8712 00 70; the European nomenclature does not differentiate based on wheel diameter. In the US, the same bicycle falls under 8712.00.15 (both wheels not exceeding 63.5 cm), with even more specific sublines, such as 8712.00.15.10 for both wheels not exceeding 50 cm.
For a lightweight city or racing bicycle with larger wheels, the EU maintains the same CN code, while the US moves to 8712.00.25 and applies additional criteria (including weight and tire width). The HTSUS notes even specify how wheel diameter must be measured (up to the outer circumference of the mounted tire). The practical consequence is that a product falling under one GN/TARIC line in the EU may fall under a different HTS line in the US, with a different duty rate.

2. Origin

Both the EU and the US operate with non-preferential and preferential origin. Non-preferential origin determines, among other things, whether general trade measures apply, while preferential origin determines whether a product qualifies for reduced or zero import duties based on an agreement or programme. In the EU, non-preferential origin is the country where the good is “wholly obtained”, or where the last substantial, economically justified processing or working took place that resulted in a new product or represented an important stage of manufacture. Preferential origin follows the product-specific rules set out in the relevant agreement.

The US typically applies the substantial transformation test for non-preferential origin: origin is where a product gains a new name, character, or use. As in the EU, preferential regimes follow their own product-specific rules.
The networks of agreements and programmes also differ. The EU has a broad range of free trade agreements with third countries, as well as unilateral preference schemes that reduce or eliminate duties for certain origins.

The US has free trade agreements with around twenty countries, including Canada and Mexico, Australia, South Korea, Singapore, Chile, and Peru, and is negotiating with, among others, the United Kingdom, Kenya, Taiwan, and Japan. In addition, the US has unilateral “preference programs” such as GSP (expired since 2020, renewal lies with Congress), AGOA (Sub-Saharan Africa), the Caribbean Basin Initiative, and a programme for Nepal. Application almost always requires compliance with product-specific origin rules. Lastly, the US applies a separate tariff column for certain countries, with higher rates than usual; currently, this includes Cuba, North Korea, Russia, and Belarus. For businesses, this means that the same supply chain may involve different preferential opportunities and risks in the EU and the US.

Another (bicycle) example helps clarify this. If a bicycle of Chinese origin is imported into the US, the normal rate in the General column applies (e.g. 11%). If the same bicycle is of Colombian origin, it qualifies for duty-free treatment under the bilateral agreement (Special column). If the bicycle is of Cuban origin, it falls under the second tariff column and is subject to a high duty rate (e.g. 30%). This shows how origin directly impacts the applicable duty.

3. Customs value

Both the EU and the US apply the transaction value as the primary basis. The EU requires that certain costs up to the external border of the Union be included (such as international freight and insurance), while costs incurred after entry are excluded. In practice, the EU adjusts to a CIF value at the external border: for FOB or EXW deliveries, freight and insurance up to the border must be added; for DDP deliveries, import duties and VAT are removed.
In contrast, the US generally does not include international freight and insurance costs; the customs value amounts to an FOB value in the country of export. This explains why the taxable basis for the same shipment may be lower in the US than in the EU.

Which sale counts in a supply chain?
Another difference that can affect the final duties is the question of which transaction in a supply chain may serve as the basis. In the EU, since 2016, the customs value must be based on the sale that takes place immediately prior to entry into the Union; the previous system, which allowed selection of an earlier (lower) sale price, has been abandoned.
In contrast, the US allows the “first sale” under certain conditions: in a chain involving multiple sales, an earlier sale price may be used, provided the transaction is at arm’s length and the goods were clearly destined for the US at the time of that earlier sale. For US importers, this can lead to significant duty savings; in the EU, that route is no longer available, and the last sale must be used.

4. Conclusion

The differences between the EU and the US are not merely legal-technical; they determine which code you declare, what duty you pay, and which documents you must have ready. With proper preparation, you can avoid delays and post-clearance assessments, and make optimal use of available preferences.
Do you have questions about how this applies to your product or supply chain, or would you like advice on classification, origin, or customs value? Feel free to contact us; we will be happy to assist you.

While every care has been taken in the preparation of this publication, Customs Knowledge accepts no liability for any errors or omissions, nor for their consequences. This article is not intended as specific advice. Please also refer to the General Terms and Conditions of Customs Knowledge BV.