What is a Customs Bond?

A Customs Bond is a financial guarantee issued by a surety company and required by U.S. Customs and Border Protection (CBP) to ensure that importers comply with customs regulations and pay all duties, taxes, and fees. There are two main types of customs bonds: Continuous and Single Entry. A Continuous Entry Bond (CEB) covers multiple shipments over a year and can renew automatically, making it ideal for frequent importers. In contrast, a Single Entry Bond covers only one shipment and is suitable for occasional importers. Continuous bonds offer convenience and cost savings, while single entry bonds provide flexibility for one-time shipments.

How is my Bond amount calculated?

A CEB amount is calculated based on the total import Duties, Taxes and Fees (DTF) over the past 12 months. The bond amount should not be less than 10% of this prior 12 month DTF value, with the minimum bond amount being $50,000. For annual DTF values under $1million bonds are available in $10,000 increments. For example, if your DTF is $500,001 the minimum acceptable bond is $60,000; if your DTF is $600,001 the minimum bond is $70,000 etc. After your DTF passes $1million, the increments increase to $100,000.

Once you have projected your 12 month DTF value, Woodland can help you purchase your required bond.

CBP Says my Continuous Import Bond is Insufficient – What do I do?

If, during their monthly review, CBP find your CEB no longer covers 10% of your previous 12 month DTF, they may issue you an Insufficiency Notice and place existing imports on customs hold until you increase your bond amount. If your original $100,000 bond becomes saturated and you are required to purchase a $200,000 bond, your total potential liability to CBP, as well as the surety holders, is now $300,000. Sureties underwrite their premiums based on aggregate bond liability, so you would have been better off if you had originally applied for the $200,000 bond, rather than only increasing to that amount when necessary.

Summary

With the drastic increase in tariff activity under the current administration, bond saturation has become much more common. These changes impact goods from China, Mexico, Canada, steel, aluminum and more, with further announcements expected in early April.

To save yourself potential customs delays and unnecessary bond charges, it is important that at bond renewal time you take the time to project your future 12 month DTF costs and use this projection to secure yourself a conservatively valued import bond.