Undoubtedly, you’ve heard about the recent tariffs implemented by the Trump administration. If you import aluminum or steel, you (or your business) have already paid these additional duties and if you import from China, you have felt the effects of the tariffs or will feel them in the very near future. You may be planning for this by meeting with customers, reworking sales agreements.
What you may not realize is that there is a hidden cost to these tariffs that is not being addressed on the nightly news: your continuous import bond.
Say you’ve been in the business for some time. After engaging in importing for a few years you feel like you finally understand the regulatory requirements and costs involved. Without warning, a letter arrives from either your bond company or customs telling you that your bond is insufficient and that, if you don’t increase it, you will not be able to import into the US. Until now, the bond has been more than sufficient to cover your needs. So what exactly went wrong?
However, if you import aluminum or steel products, subject to the Section 232 duties or Chinese products, or subject to the Section 301 duties of 10-25% then your bond may reach its limits before the annual period ends. Remember, these duties are on top of any anti-dumping duties that you may already be paying.
The amount of your bond is not arbitrary; in fact, it is set based on the number of duties you pay in a 12-month period. The required bond amount will be 10% of the duties paid, rounded up to the nearest $1,000.00 and at least the minimum of $50,000.00. The increase in duties paid, in some cases well over 20% of the value imported, has used up these limits before the time has expired. Customs brokers are seeing an influx of these increased bond amounts and are working diligently to resolve them.
Customs has begun to adjust how they determine the bond amounts by having importers who apply for bonds report not only the duty they have paid over the past twelve months but the amount they expect to pay over the next twelve months. The combined amounts will be used to determine your bond amount for the coming 12-month period.
If you are unsure about the effects the new duties will have on your bond, contact BDP's Regulatory Compliance Team. We can run an analysis on your bond and advise you if they believe an increase will be necessary and help you with the proper timing of it.
With proper planning, you won’t be surprised when you are notified by CBP that your bond must be increased to continue your import entry activity.