Customs Bond Requirements for Importing into the United States

The U.S. Customs bond is required for importers to cover the risk of non-payment of U.S. duties.

The U.S. Customs and Border Protection (CBP) has recently updated its procedure for calculating the cost of customs bonds for imports to the United States. The last directive on customs bonds was issued in 1991.

Types of Customs Bonds

Each time goods are imported into the USA, the importer must obtain a Customs Bond (or Entry Bond) with U.S. Customs. This is mandatory insurance that protects Customs from any unpaid duties. For example, if Customs reclassifies tariff codes for goods and the new codes incur higher duties, this discrepancy is covered by the bond. The customs bond can be either a Single Entry or an Annual bond.

The Single Entry bond is calculated for each individual import and is often cost-prohibitive. For this reason, the Annual bond is preferred. Typically, a lower-value bond, covering duties up to $50,000 per year, is sufficient, regardless of the number of imports made in that year. Having an annual bond reduces administrative costs related to the ISF bond (which must be activated within 40 hours of shipment departure) and reduces the risk of customs inspection (since it shows that the importer is a regular entity, not a one-time importer). When a U.S. company becomes the importer, they must obtain the annual bond and become the "Importer of Record," responsible for importing and clearing goods purchased from the parent company.

How to Calculate the Amount of Customs Bonds in the U.S.

The amount of the customs bond for the U.S. is generally determined using a formula that calculates 10% of the duties, taxes, and fees paid in the previous 12 months. U.S. Customs reviews this formula regularly, and if necessary, issues notices for bond amount increases whenever the formula produces a value higher than the current bond amount provided by the importer. These "insufficient bond" notices can lead to requests for guarantees from insurance companies and result in "bond overlap," where Customs increases bond amounts multiple times in a year, necessitating multiple bonds. The new CBP guidelines specify that this formula will be applied to the "total estimated" duties for the importer in the previous 12 months, whereas the 1991 guidelines applied the formula to the "duties paid."

Other Changes in U.S. Customs Regulations for Customs Bonds

This change may result in more frequent requests from CBP for bond increases, particularly in the case of unexpected duty increases due to anti-dumping proceedings or compensatory duties. Other important changes in the new U.S. customs bond directive include:

• A new section on the electronic transmission of bonds;
• A new Annex identifying special classes of goods regulated by Partner Government Agencies, with minimum bond amounts for these cases (e.g., flammable fabrics regulated by the Consumer Product Safety Commission);
• Previously, only bonds with Activity Code 1 (Importer or Broker) were calculated with $10K increments up to a maximum of $100K, then with $100K increments. The new directive applies this standard to ALL annual and continuous bonds;
• New rules on bonds for Foreign Trade Zones (FTZs), including a minimum bond of $50K for each activated FTZ, and a list of circumstances that may increase the FTZ bond amount (e.g., substantial changes to the FTZ area or changes in the types of goods admitted to the zone).