News Entries

Bond Sufficiency – Not Quite Business as Usual

As discussion of tariffs has intensified, so has the conversation surrounding bond sufficiency. While the formulas for determining bond amounts have not changed, the game around those formulas has. Tariffs have become a moving target and the way CBP is approaching bond sufficiency appears to be moving with it.

Last week, members of CBP’s revenue division, the group responsible for monitoring continuous bond sufficiency, called on the sureties to discuss the growing number of insufficiencies these new tariffs have caused. On a positive note, CBP wants to work proactively with each surety and the trade community to ensure bonds are set at the proper levels. Historically, bond sufficiency is determined by the duties, taxes, and fees an importer has paid to date for the prior 12 months. That formula won’t be changing, however CBP will be asking importers to start factoring in projected duties, taxes, and fees when deciding which bond limit to use. In CBP’s eyes, this will eliminate the “stacking liability” of two or three bond increases in the same annual period.

Stay tuned as CBP has also indicated potential changes to the allowable timeframes granted to increase certain bonds, as well as new language indicating that importers need to forecast what they will be paying for the next 12 months under Section 232 and 301.

IB&M offers many online bond sufficiency management tools in Bond Catalyst ™ to help you stay up-to-date on bond saturation. With one click, brokers can view which bonds may require an increase. With this essential information, customs brokers can guide their clients with ease. Bond Catalyst also allows brokers the ability to enter projected duties to calculate what the proper bond limit should be. Under Section 232 and 301, it’s not inconceivable to see bonds that were a few hundred thousand end up in the millions. With Sompo’s recent acquisition of Lexon Insurance, IB&M is stronger than ever with the ability to write bonds approaching $100,000,000 in penalty.

Additionally, brokers should remind importers to forward all correspondence received from CBP in a timely manner. This is also a good opportunity to check the MSBAR report to ensure importers are not using other brokers to evade increased duties. This behavior may not meet your brokerage’s compliance standards. The MSBAR gives you the visibility to manage importer activity nationwide.

Though we live in uncertain times, we have seen this before. IB&M gives you the dynamic resources and tools needed to stay on top of important industry changes. You can always count on IB&M at your side.