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What Is A Customs Bond And Why Importers Need One?

Successfully importing products is a multi-step process. Part of that process involves paying import duties and taxes. A customs bond can make sure payments are taken care of correctly.

    Last Modified: 

    February 11, 2022

    Customs Bond Definition

    The U.S. Customs and Border Protection (CBP) requires a customs bond which is a binding contract for commercial imports valued at $2,500 or more. It acts as a financial guarantee between the importer of record (you), the CBP and the insurance/surety company issuing the bond. By obtaining a customs bond it ensures that relevant fees and import duties are paid to CBP.

    What Does CBP Stand For?

    The CBP is the abbreviation for the U.S. Customs and Border Protection. To be clear, this is a different agency than the U.S. Border Patrol. While the Border Patrol is technically a part of the CBP, the Border Patrol unit specifically patrols the borders while the CBP as a whole works to review and monitor imports and secure the border from drugs and other items entering the country illegally.

    Customs Bond Process Diagram

    Customs Bond Process - Diagram
    In 2020, the U.S. imported $2.42 trillion worth of goods.

    Total Value of Goods Imported by U.S. (Last 5 Years)

    Year

    U.S. Imports*

    YoY Difference

    2017

    $2.39

    -

    2018

    $2.64

    +9.9%

    2019

    $2.67

    +1.1

    2020

    $2.42

    -9.8%

    2021 (through 7/30/21)

    $2.28

    -

    2021 (Adjusted**)

    $3.90**

    +46.8%**

    *In Trillions
    Source: https://www.cbp.gov/newsroom/stats/trade

    When Do I Need a Customs Bond?

    There are a number of situations when you need an import bond. These situations include:

    •  When your imports are for commercial use and valued over $2,500
    •  When your imported goods are required to meet federal regulations If the merchandise is subject to additional government agency rules and regulations, the bond amount must be equal to three times the value.

    Think of a customs bond as the ticket you pay for your goods to gain entry to the United States. Before you purchase that bond, your imported goods will be held at customs and are pending approval until you show proof of that bond. You need the bond to gain final approval to release your goods.

    What Does It Mean if a Shipment is Bonded?

    That means you did the right thing and got a customs bond! In short, a bonded shipment means your goods are covered for customs charges, including all duties, taxes and any penalties that may occur during the import process.

    What is Bond in Freight?

    When you are shipping goods in-bond, that means your products are moving within the United States but are still waiting on official customs clearance from Customs before the goods can officially be sold. Customs Brokers can help your goods reach official approval from Customs.
    Since 2017, CBP has collected over $200 million in additional fees through importer audits.

    Total Collected from U.S. Import Audits (Last 5 Years)

    Year

    U.S. Imports*

    YoY Difference

    2017

      $41.3

    -

    2018

      $42.2

      +2.2%

    2019

      $43.1

      +2.1%

    2020

      $44.6

      +3.4

    2021 (through 7/30/21)

      $81.5

    -

    2021 (Adjusted**)

      $139.7**

      +103.2%**

    *In Millions
    Source: https://www.cbp.gov/newsroom/stats/trade

    How Much Is a Customs Bond?

    The import bond cost is calculated based on the amount of taxes and fees that are tied to your imported goods. Obtaining the right bond is important, but it's also important for it to be the right amount.

    Typically, the bond amount is at least 10 percent of the total duties and fees paid to the CBP. As a benchmark, this total is usually $50,000 at the minimum. If you need a larger amount you can follow the CBP’s calculation table below:

    Total Duties & Taxes

    Bond Size

    $0 to $499,999

    $50,000

    $500,000 to $599,999

    $60,000

    $600,000 to $699,999

    $70,000

    $700,000 to $799,999

    $80,000

    $800,000 to $899,999

    $90,000

    $900,000 to $999,999

    $100,000

    $1,000,000 to $1,999,999

    $200,000

    $2,000,000 to $2,999,999

    $300,000

    $3,000,000 to $3,999,999

    $400,000

    $4,000,000 to $4,999,999

    $500,000

    $5,000,000 to $5,999,999

    $600,000

    $6,000,000 to $6,999,999

    $700,000

    $7,000,000 to $7,999,999

    $800,000

    How Is My Import Bond Used?

    Import bonds are used by Customs Brokers to clear goods. The bond is critical because it:

      • Contains a unique bond number tied to your company’s importer number (Tax ID)
      • Is valid at all U.S. port of entry
      • Remains tied to all importing documents filed for your goods

    Are there Different Types of Customs Bonds?

    Yes, there are seven different types of customs bonds. Each type of bond is labeled with a different Activity Code.

    What is an Import Bond?

    Activity Code 1 - Import bonds are required by importers to clear U.S ports of entries. This is the gold stand standard of bonds when it comes to importing.

    What is a Drawback Bond?

    Activity Code 1a - A drawback bond allows for importers to receive up to a 99% refund of all duties paid as long as the goods were exported out of the U.S.

    What is a Custodian Bond?

    Activity Code 2 - Custodian bonds cover specific bonded merchandise working through businesses such as warehouses, carmen, container stations and carriers. These goods are known as in-bond.

    What is an International Carrier Bond?

    Activity Code 3 - International Carrier Bonds cover the goods, the passengers involved and the overtime involved for those working to clear international goods.

    What is an FTZ Bond?

    Activity Code 4 - Foreign Trade Zone Bonds are needed for Custom Clearance in non U.S. territories. This covers your goods in foreign areas and also keeps the goods secured when they are built or repacked outside of U.S. territories.

    What is an Airport Security Bond?

    Activity Code 11 - Airport Security Bonds are utilized for companies you outsource to for moving goods to secure areas of airports. This applies to employees in all areas of the airport that handle your goods as well.

    What is an Importer Security Filing Bond?

    Activity Code 16 - Importer Security Filing Bonds are needed for each ISF filing to help protect against and oversee fines and penalties that may occur for late ISF Filings.

    What is the Most Common Type of Importer Bond?

    The single entry bond and the continuous bond in Activity Code 1 are the bonds that importers use most often to clear Customs. Read on to learn more.

    What is a Single Entry Bond?

    A single entry bond is for importers that import a single shipment for a specific port of entry.

    This type of customs bond works well if you occasionally import goods that have a low cost value. This option is ideal for companies that typically import less than four shipments into the U.S. per year.

    How Much is a Single Entry Bond?

    The value of the bond you need can vary too. At minimum, a single entry bond should be worth the value of the goods you are importing, plus any applicable duties, fees and taxes. If your imports are regulated by another federal agency, you’ll need to get a bond worth 3 times the value of the goods imported.This means that if you are importing $8,000 in toys regulated by the Consumer Product Safety Commission, you’ll need a bond worth at least $24,000.

    If you are shipping your imports by sea you’ll be required to obtain additional bond coverage to meet International Security Filing (ISF) regulations.
    36% of CBP trade seizures were related to Intellectual Property Rights (IPR)

    Trade Seizures Related to Intellectual Property Rights (IPR)

    Type

    2020

    2021 (through 7/30/21)

    Trade Seizures

    73,708

    70,683

    IPR Trade Seizures

    26,503

    22.849

    Percentage of IPR Trade Seizures

    36% 

    32.4%

    Source: https://www.cbp.gov/newsroom/stats/trade

    What is a Continuous Bond?

    A continuous bond covers all of an importer’s shipments with international carriers at all US ports of entry for an entire year. Continuous bonds can be set to renew automatically Continuous bonds are important for importers with a large number of entries that use several ports of entry annually. This type of customs bond also handles shipments with high value.

    How Much is a Continuous Customs Bond?

    You must purchase at least $50,000 in coverage when getting a continuous bond. The total cost will rise depending on the tariff rates and taxes. Bonds are calculated to cover at least ten percent of the duties and taxes collected by the CBP. It’s important to know that a continuous customs bond will cover ISF rules when shipping goods by seas.

    Documents For Importing You Need to Have

    To achieve an effective and efficient importing process, file the necessary import documents.

    1. What is the Importance of a Commercial Invoice?

    The commercial invoice contains transaction details regarding your imports, which includes:
      • Purchase Price
      • Product description
      • Customs clearance number
      • Country of origin
      • And more

    2. What is a Packing List in Logistics?

    A packing list details your imports, outlining the contents, dimensions and the net weight of each package/container.

    3. What is a Bill of Lading?

    A bill of lading is a legal document that lists goods in the form of a receipt and outlines the details of those goods.

    A bill of lading covers three main purposes:

      • It's an official receipt that confirms your imports are loaded
      • It contains the terms of your contract
      • It's the official title for your goods

    4. What is the Purpose of Notice of Arrival?

    An arrival notice is issued by the carrier’s agent to the consignee and provides detailed information about the arrival and further details required for customs clearance processing.
    The top 5 US import partners in 2020 were China, Mexico, Canada, Japan, and Germany

    Top 5 U.S. Import Partners in 2020

    Country

    Total Import Value

    China

    $360,415.0

    Mexico

    $282,484.9

    Canada

    $259,074.4

    Japan

    $102,260.1

    Germany

    $100,055.4

    Source: https://www.trade.gov/data-visualization/trading-partners-exports-and-imports

    Customs Brokers Obtain Import Bonds

    Sureties are companies licensed by the U.S. Treasury Department to access import bonds.. Customs brokers can work as agents for sureties and are licensed and regulated by the CBP to sell bonds. Brokers help you with all of your importing needs, including meeting all Federal requirements and making sure you have all the proper importing paperwork filed.

    Many licensed customs brokers, though, will not issue you a bond without a power of attorney, which files import entries on your behalf.

    Customs bonds can be purchased from a surety company or Licensed Customs Broker. While surety companies typically only provide customs bonds, Licensed Brokers also offer customs clearance services.

    How Do I Get a Customs Bond?

    Once you’ve confirmed that you need a customs bond, the next step is obtaining one.The process to get a Customs Bond through USA Customs Clearance is as follows:

      1. Purchase your continuous customs bond from us
      2. Complete the simple & quick online application
      3. Receive approval for your application the same day
      4. Begin importing with your bond within 2 days of CBP application activation

    When you utilize the services of a Licensed Customs Broker, you ensure your bond is correct, complete and you have a secure transaction. Licensed brokers handle the behind the scenes import bond work for you.

    Connect with a customs broker that has the experience you need to handle the details so you can focus on your importing business. These experts can help you increase bond amounts and update contact information. Brokers allow you to focus on your business and avoid importing hurdles.

    2 comments on “Customs Bond”

    1. I am remodeling my personal home and property and wanting to purchase numerous products in the future from China through Alibaba.com. I was told I need to have a bond in order to pick them up at a US Port. What kind of bond is required for personal shipments of product (less than$2,500 per shipment invoice) do I need to acquire in order to pick these products up at US Port of entry.

    2. A customs bond is often required to import products into the U.S. If goods that you're importing are regulated by Partner Government Agencies (PGA) or if the import is valued at $2,500 or more, a customs bond will be required. Importers can obtain a customs bond from a Licensed Customs Broker or surety company.

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    Ocala, FL 34470
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