U.S. Customs Border and Protection (CBP) recognizes that Section 232 and 301 tariffs are having a significant impact on continuous bond amounts and expect to see an increase in insufficient bonds in the coming months. In the meantime, CBP is urging importers, brokers, and sureties to be mindful when determining bond sufficiency based on Section 232 and 301 tariffs.
How Bonds are Being Impacted
Continuous bonds—for dutiable goods that are not subject to a participating government agency (PGA)—are normally based on 10% of the projected amount of duties, taxes, and fees that an importer is expected to pay over a 12-month period. This means, a company’s predetermined bond may now be insufficient due to duty increases related to the new tariffs. One steel importer stated they had a bond that went from $200,000 to $11 million, according to the JOC.
To assist brokers, sureties, and importers, CBP will be sending an email—to each surety—to discuss helping them with their long-term projections, to ensure importers will be sufficiently bonded for the 12-month period.
Insufficient bonds can hamper an importer’s ability to release their cargo at U.S. ports and cause them to incur demurrage, because CBP can hold shipments that have an insufficient bond.
This bond issue is expected to escalate as importers across a range of sectors determine whether the additional $200 billion in tariffs from China affect their goods. It is crucial to make sure your company has sufficient Customs bonds in place. If you need assistance, contact Mohawk Global Trade Advisors.