Continuous Bond Insufficiency – Due to SECTION 232/301 TARIFFS
If you receive a formal notice from U.S. Customs (CBP) advising you of a situation that your existing bond is insufficient it is absolutely imperative that you contact our office immediately! What must happen is that your existing Customs bond must be terminated and replaced with a new continuous bond for new greater amount. Please remember that it takes 2 – 3 weeks for CBP to accept a bond “TERMINATION AND REPLACEMENT”. So should you fail to provide timely remedy to the situation you may be left in a period of time where you cannot import. The reason being that your old bond may have been set by CBP with a “bond deficiency” flag rendering it useless. Basically, you would hold not continuous bond on file with Customs.
This is one of the harsh realities that go hand in glove with the Section 232 and Section 301 tariff increases. Section 232 and 301 duty increases will bring to the importing public the probable shock of finding that their current Annual Continuous Bond is not sufficient to cover 10% of the duty money’s paid in a calendar years period. If you thought it was bad enough having to pay 10% or 25% duty on the goods you import into (or ship to) the United States, the next ripple effect will be that the bond underwriters (the people that underwrite your annual U.S. Customs Continuous bond) will see massive increases in duties being paid to Customs on your behalf underwritten on their bond documents. Without a doubt the bond underwriters will be quickly looking at (reviewing) all importers whose annual duty money’s appear to be increasing in quick and massive steps. The end result, most likely will be the bond underwriter’s increasing their annual bond premiums from 4 to 10 times the current annual premium.
The surety companies (bond underwriters) have already made this move on companies who import products subject to Anti-dumping duty (ADD) and/or Countervailing duty (CVD) moneys’. Additionally , in many cases with importers dealing in Anti-dumping and Countervailing duties the underwriters are forcing importers to make post a monetary cash amount, usually equal to the value of their current Continuous Bond or posting letters of credit through the importers banking establishment.
Sadly, if you are a firm that imports goods subject to the Section 232 and 301 Presidential Proclamation tariff increases AND included in the importations are goods that are subject to the scope of Anti-dumping and Countervailing duty claims you stand to be hit with the double whammy of posting cash deposits (or letters of credit) and increasing your bond amount to a position that leaves the bond underwriters with a greater since of security and protection. It is fairly clear, with these massive duty increases that life has changed for the surety companies, the importers, and the brokerage community. The surrey companies have bond sufficiency calculators on the websites. No doubt, if you trade in the Section 232 and Section 301 tariff commodities or import ADD or CVD materials that you will be hearing from the surety company (bond underwriters) sooner than later.
Again, if you receive a notice from Customs regarding a serious bond deficiency situation, you need to contact your broker as soon as possible for assistance in setting a remedy to the situation.
