Glossary of Trade Policy Terms: HTS, FTZ, Section 301 and More

Navigating US trade policy can feel like learning a new language. Between acronyms, agency jurisdictions, and tariff classifications, even seasoned procurement leaders sometimes get lost in the terminology. If you're evaluating whether to reshore manufacturing from China — or simply trying to understand how tariffs affect your landed cost — knowing the vocabulary is the first step toward making informed decisions.

We at Reshore built this trade policy glossary to cut through the jargon. Whether you're calculating Section 301 exposure, exploring Foreign Trade Zones, or parsing USMCA rules of origin, the definitions below will help you speak the language of cross-border manufacturing with confidence.

Why a Trade Policy Glossary Matters in 2026

Trade policy has moved from the back office to the boardroom. Since the expansion of Section 301 tariffs and the renewed focus on domestic manufacturing, terms like "HTS code" and "FTZ" now appear in CFO presentations and supply-chain risk reports. Misunderstanding a single classification can mean the difference between a profitable product line and one that bleeds margin with every container.

This glossary is organized alphabetically within three main categories: tariff terms, customs and classification, and trade agreements and programs. For deeper dives, we link to related Reshore resources throughout.

Tariff Terms

Ad Valorem Duty

A tariff calculated as a percentage of the imported good's declared value. For example, a 25% ad valorem duty on a $10,000 shipment equals $2,500 in tariffs. Most US tariffs — including Section 301 — are ad valorem.

Anti-Dumping Duty (ADD)

A special tariff imposed when the US Department of Commerce determines that a foreign producer is selling goods in the US below "fair value." ADDs are product- and country-specific and can exceed 100%. Chinese plastic components and resins have historically been frequent targets.

Countervailing Duty (CVD)

A duty applied to offset foreign government subsidies that give overseas producers an unfair price advantage. Often paired with anti-dumping investigations.

De Minimis

The value threshold below which imported shipments enter duty-free. The longstanding $800 de minimis threshold under Section 321 has come under heavy scrutiny, with recent policy changes narrowing eligibility — particularly for goods of Chinese origin.

MFN (Most Favored Nation) Rate

Also called the "Normal Trade Relations" rate, this is the baseline tariff the US applies to imports from WTO member countries. It's the rate you'd pay before any Section 301 surcharges or trade-agreement preferences are layered on.

Section 201 Tariff

A "safeguard" tariff authorized under the Trade Act of 1974 when a domestic industry suffers serious injury from import surges. Solar cells and washing machines are prominent historical examples.

Section 232 Tariff

Tariffs imposed under the Trade Expansion Act of 1962 on the grounds of national security. Steel and aluminum are the most well-known Section 232 categories, with rates of 25% and 10% respectively. See our 2026 US Tariff Guide for the current landscape.

Section 301 Tariff

Tariffs authorized under the Trade Act of 1974 to respond to unfair trade practices by foreign governments. Since 2018, Section 301 has been the primary mechanism for tariffs on Chinese-origin goods, with rates ranging from 7.5% to 100% depending on the product list and recent expansions.

Specific Duty

A tariff expressed as a fixed amount per unit (e.g., $0.15 per kilogram), as opposed to a percentage of value.

Customs and Classification Terms

CBP (US Customs and Border Protection)

The federal agency responsible for enforcing tariffs, processing imports, and administering trade laws at US ports of entry.

CTPAT (Customs Trade Partnership Against Terrorism)

A voluntary CBP program that offers expedited clearance to importers who meet supply-chain security standards. CTPAT certification is common among large reshoring operations.

Country of Origin

The country where a good is "wholly obtained" or where it underwent its "last substantial transformation." Country of origin drives tariff rates, labeling requirements, and trade-agreement eligibility. This is not the same as the country of export.

Customs Broker

A licensed professional who files entries, classifies goods, and manages duty payments on behalf of importers.

Entry Summary (CBP Form 7501)

The core customs document that declares the value, classification, and origin of imported goods to CBP.

First Sale Rule

A valuation method allowing importers to declare the first sale price in a multi-tier transaction (e.g., factory-to-middleman) rather than the higher middleman-to-importer price. Used strategically to reduce ad valorem duties.

Harmonized System (HS)

The international six-digit classification system maintained by the World Customs Organization. The first six digits of every HTS code are standardized globally.

HTS (Harmonized Tariff Schedule)

The 10-digit US extension of the Harmonized System, maintained by the US International Trade Commission. HTS codes determine the duty rate, trade-program eligibility, and reporting obligations for every imported product. Getting your HTS codes right is foundational — and costly to get wrong.

HTS Digits	Purpose
1–2	Chapter (broad category)
3–4	Heading
5–6	Subheading (HS-aligned)
7–8	US tariff rate line
9–10	US statistical suffix

Landed Cost

The total cost of a product delivered to your door, including unit price, freight, insurance, duties, brokerage, and handling. Reshoring decisions should always compare landed costs, not ex-works prices.

Ruling (Binding Ruling)

A written determination from CBP confirming the classification, valuation, or country of origin of a specific product. Binding rulings provide legal certainty and can be requested via CBP's eRulings portal.

Trade Agreements, Programs, and Zones

Drawback

A refund of up to 99% of duties paid on imported goods that are later exported or used in manufacturing for export. An underused tool that can meaningfully offset tariff costs.

FTZ (Foreign Trade Zone)

A designated secure area within the US — but legally considered outside US customs territory — where goods can be stored, assembled, or manufactured with deferred, reduced, or eliminated duties. The FTZ definition matters for reshoring because goods shipped from an FTZ to a foreign destination never incur US tariffs, and goods entering US commerce can be classified at the finished-product rate (often lower than component rates). The FTZ Board administers the program.

GSP (Generalized System of Preferences)

A US program that provides duty-free entry for thousands of products from designated developing countries. GSP has lapsed and been reauthorized multiple times; always confirm current status.

IEEPA (International Emergency Economic Powers Act)

A statute granting the President broad authority to regulate commerce during a declared national emergency. IEEPA has been increasingly invoked to impose tariffs outside the traditional Section 301/232 framework.

MPF (Merchandise Processing Fee)

A fee CBP charges on most formal entries, currently 0.3464% of value with minimums and maximums. Often overlooked in landed-cost models.

NAFTA

The predecessor to USMCA. Any reference to NAFTA in current contracts likely needs updating.

Rules of Origin

The criteria — such as tariff shift, regional value content, or specific process requirements — that determine whether a good qualifies for preferential treatment under a trade agreement. USMCA rules of origin for automotive and plastics content are particularly nuanced.

USMCA (United States-Mexico-Canada Agreement)

The successor to NAFTA, in force since July 2020. USMCA provides duty-free treatment for qualifying goods produced in North America and is the backbone of most nearshoring strategies today. Our analysis on USMCA vs. Tariffs explains why Mexico-based manufacturing offers durable tariff protection for plastic components.

Putting the Vocabulary to Work

Understanding these tariff terms is table stakes — but the real value comes from applying them to your specific product mix. A 25% Section 301 surcharge on an injection-molded housing classified under HTS 3926 has a very different financial impact than the same rate on a raw resin under HTS 3901. And if you're producing in Mexico under USMCA rules of origin, that 25% may disappear entirely.

For companies weighing whether to exit Chinese suppliers, we recommend pairing this glossary with three other resources:

• The Tariff Impact Calculator to quantify your annual exposure by HTS code
• The Reshoring Terms Glossary covering 75 supply-chain and nearshoring concepts
• The Glossary of Plastics Manufacturing Terms for resin codes and process vocabulary

If you'd like help mapping your current HTS codes to USMCA-compliant production in Mexico or the US, Reshore's reshoring assessment walks through tooling transfer, supplier matching, and landed-cost modeling in one engagement.

Frequently Asked Questions

Q: What is the difference between an HTS code and an HS code?

HS codes are the six-digit international classification used by 200+ countries under the World Customs Organization. HTS codes are the 10-digit US-specific extension that adds two digits for tariff rate and two for statistical tracking. Importers into the US must use the full 10-digit HTS.

Q: How do I find the correct HTS code for my product?

Start with the US International Trade Commission's HTS search tool, review CBP's CROSS database of past rulings, and — for high-stakes or ambiguous classifications — request a binding ruling from CBP. Many importers also engage licensed customs brokers or trade attorneys to validate classifications.

Q: Is a Foreign Trade Zone worth it for small importers?

FTZs carry setup and compliance costs that favor operations with at least several million dollars in annual dutiable imports or significant re-export activity. Smaller importers may benefit more from duty drawback, first sale valuation, or shifting production to a USMCA-qualifying location in Mexico.

Q: Does Section 301 apply to goods made in Mexico with Chinese components?

Generally no, provided the goods undergo substantial transformation in Mexico and meet USMCA rules of origin. However, CBP scrutinizes transshipment carefully, and some Chinese inputs (steel, aluminum, certain resins) can trigger additional scrutiny. Proper documentation of production processes in Mexico is essential.

Q: What are the most important tariff terms for plastics importers to know?

Plastics importers should focus on HTS Chapter 39 classifications, Section 301 List 3 and List 4A coverage, anti-dumping orders on specific resins, and USMCA rules of origin for finished plastic articles. Resin codes and process terminology also matter for accurate classification.

Q: How does Reshore help companies navigate tariffs and HTS classification?

Reshore's AI-powered platform maps your existing product catalog and HTS codes to tariff exposure, then ident