Importers are required to have a Customs Bond in order to import to the United States. The purpose of the Customs Bond is to protect the revenue of CBP. A large majority of regular importers have continuous bonds. The minimum bond size for a continuous bond is $50,000.

CBP calculates bond sufficiency on a monthly basis, analyzing the duties that importers have paid over the past 365 days and multiplying by 10%. If 10% of duties paid in that 365 day period is more than the size of the customs bond, then the bond is considered insufficient. Based on this methodology, a $50,000 bond will cover up to $500,000 in duties paid in a 365 day period.

Until recently, most importers never paid over $500,000 in duties in a given year. A $50,000 bond was more than sufficient. However with Trump’s new tariffs, many importers may find their bonds becoming insufficient very quickly in the coming months. When a bond becomes insufficient, CBP will send a bond insufficiency notice to the importer. The importer will then have a few weeks time to increase their bond to a larger size.

How to prepare for potential bond insufficiency?
The first step is to try to analyze estimated duties paid over the next year. This is incredibly difficult given the uncertainty of Trump’s tariffs. It’s best to be conservative and estimate higher duties. If duties are underestimated and a bond becomes insufficient before the 365 lifespan of the bond, importer’s will be required to purchase an even bigger bond.

It is helpful to think from the perspective of the bond company and the sureties that are underwriting the bond. The sureties are concerned about how much liability they have for a given bond. They way sureties calculate liability is by looking at the entries submitted under a given bond and seeing if those entries have liquidated. Since entry liquidation typically does not occur until roughly 314 days after the date of entry, a customs bond can carry liability for almost 10-11 months after the bond period has ended.

This chart may help importers understand the sureties perspective of bond liability:

If an importer purchased a $50,000 bond on April 1, 2024 and the bond was renewed on April 1, 2025, the surety most likely will be holding $100,000 in stacked liability at the time of renewal.

In past decades, when duties were much lower, there was much less risk for sureties. However the recent massive increase in tariffs has greatly increased the risk exposure for sureties. Sureties are taking steps to limit their risk.

#1 – Sureties are asking importers to provide business financials to demonstrate the strength of their business. Ideally businesses have 3rd party audited financials from accounting firms.

#2 – Sureties are asking importers to sign business indemnities. In many cases, we’re seeing sureties even ask for personal indemnities signed by the actual owners (as well as their spouses) of the businesses.

#3 – If the bond size is too large and/or the financials of the business are not strong enough, sureties are asking importers to provide full collateral on the Customs Bond. This is the worst case option, but we’re seeing it become common. This means that if an importer wants a $50,000 bond, they would have to provide $50,000 in collateral. Note that the following year, when the bond needs to be renewed, the surety most likely would ask for ADDITIONAL collateral. After two years, the surety may have $100,000 in total collateral. After three years, the surety may have $150,000 in total collateral held. This is assuming the size of the bond is not increased. If the size of the bond needs to be increased, the collateral would also need to be increased.

Collateral will be “returned” six months after entries for that import period covered have liquidated. I say “returned” because importers may have to add more collateral the following year when the bond renews again. It would not be uncommon for sureties to always have on hand roughly three years of collateral.

For our long time importers that we help manage the customs bond for, we are doing are best to try to help avoid collateralization of the bond.

Based on our recent experience, when the bond size hits somewhere between $100,000 to $200,000, the sureties are most likely to consider requiring collateral. There are exceptions. To help prepare for this negotiation with the bond companies, importers should be prepared to provide updated business financials. Importers should be prepared to sign indemnities to the bond companies. If importers have a parent company, they should be prepared to also show the business financials of their parent company and even possibly have the parent company sign the indemnity form.

Extra Consideration for Foreign Importers
CBP allows foreign entities to act as the importer in the United States. However in recent months, due to the high tariffs, sureties have become extremely reluctant to provide Customs Bonds for foreign entities. Almost all foreign entities are now being required to collateralize their Customs Bonds at the time of renewal. We also learned this past week that sureties are also requiring foreign entities to post collateral on single entry bonds.

This is a massive hurdle for foreign importers who were hoping to act as the importer for goods entering the United States. We are seeing many U.S. domestic importers try to push the responsibility for importing to their shippers. Those foreign shippers who want to act as a U.S. importer should be prepared to post collateral on their Customs Bond. This process can take time to setup.

Please feel to reach out to our bond team if you have any questions.