This post is authored by Fox Rothschild associate Rocky Rogers:
As a result of the new Section 232 and Section 301 tariffs on steel, aluminum, and goods imported from China, United States importers and customs brokers relying upon continuous bonds should review their bond amount to ensure it is sufficient to account for these new tariffs. The continuous bond should be in the amount of 10% of estimated duties, taxes, and fees to be paid on goods imported over a twelve month period. The new tariffs directly increase the amount of duties owed for these types of shipments and accordingly require an increase in the bond amount.
On November 8th, the United States Customs and Border Protection issued Cargo Systems Messaging Service Update 18-000664 reminding those holding continuous bonds that sufficiency reviews are conducted on a monthly basis. The agency recommended importers forecast their import activities for the next twelve months and determine if a bond increase is appropriate. The bonding formula utilized to conduct sufficiency reviews may be found at https://www.cbp.gov/sites/default/files/documents/bond_form_7.pdf.
Importers are already reporting an increase in bond insufficiency determinations since the announcement of the tariffs. Update 18-000664 is further evidence of the agency’s increased attention to this issue.
If the Revenue Division of CBP determines a continuous bond is insufficient, any imported goods covered by that bond will not be released upon entry to the United States. This will result in accruing demurrage charges and disruption of the supply chain. Additionally, the agency can inactivate the bond, thereby requiring importers to obtain Single Transaction Bonds for future imports, which are far more costly and burdensome than maintaining a continuous bond. For any imports of goods subject to anti-dumping or countervailing duties, the bond requirements can be “stacked” because often determinations by the Department of Commerce on those types of goods take longer than twelve months, so multiple bond periods remain exposed.
The impact of the new tariffs continue to affect importers and custom brokers in a variety of different ways. Those importing goods subject to the new tariffs should immediately contact their surety to determine whether an increase in the bond amount is required.