Your Surety Bond Coverage will Likely Increase
Today I would like to bring to your attention the probability of higher demand on your surety bond coverage for import customs.
Customs Bonds: Why Importers Need to Prepare for Major Changes
The minimum bond requirement for importers is set at $50,000. this number depends on your 12 month running duty total.
When your 12 month running total increases, your bond requirement increases, and with it, certain underwriting requirements are added to the list.
How Bond Amounts Are Calculated
A standard continuous customs bond typically covers $50,000 of liability. that number is based on 10% of your expected duties, taxes, and fees paid to Customs over a 12-month period.
If your duties in the past year were $500,000, you needed a $50,000 bond.
If they jump — say you now owe $1,450,000 because of a 145% duty — your bond will immediately need to be increased.
It doesn’t increases dollar for dollar but rather goes in increments. Here is a table for your reference.
What Happens When You Need a Higher Bond
Once your bond needs exceed $100,000, it’s no longer just a routine approval. Most sureties will require:
Full financial underwriting (Profit & Loss statements, Balance Sheets)
Collateral, usually either:
Cash deposits (often refundable after bond cancellation)
Letters of Credit (LOC) from your bank
UCC Filings giving the surety a secured interest in your business assets
If you’re involved in any imports subject to anti-dumping (AD) or countervailing duties (CVD), expect even stricter collateral requirements — sometimes 100% cash collateral.
And be aware: some commodities like solar panels, steel, tires, and aluminum may be outright rejected by some sureties, no matter how strong your financials are.
Timing and Approval
Higher bond amounts — especially anything over $250,000— are not approved overnight. Underwriting can easily take weeks, not days, because of the larger exposure and additional document reviews.
If you will be required to increase your bond coverage, plan early, or at least when you receive the notification act promptly so by the time your next shipment arrives, you are not left without coverage.
Smaller Companies
Smaller Companies might have a more difficult time because of strict underwriting practices, lack of clear financial reports, among other things.
If you are afraid that you will be denied or burdened with the requirements needed for a higher bond approval, and / or the steep price to pay for said bond, consider one of the following ideas.
Use Single Entry Bonds (SEBs) for high duty shipments rather than raising your continuous bond.
Split operations: Run regular low-duty shipments under your current $50K bond, and import high-value or high-duty shipments under a different entity using single bonds.
Talk to your customs broker now to proactively manage bond requirements before it becomes a clearance issue.
Action Items
I suggest that you review your 12 months duty totals, but more importantly calculate how much your forecasted 12 month duty balance will be based on 145% if you are shipping from China or the universal 10% if you are not shipping from China, if you know you will need to increase your bond coverage soon, start shopping for prices and approvals from surety companies.
Keep your financial reports clean so when you are asked for it you can provide it immediately.
Decide on your shipments from China if you rather want to use a single entry bond to avoid having to increase your annual bond (especially if you believe there will be a deal made, the surety company will not get involved in politics and if they see a 14% duty payment they will assess your company at that rate even if a deal is made)
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