Bond Sufficiency Amid Threats of USTR List 4 and Removal of Section 232 Duties

As importers subjected to Section 301 Lists 1, 2 and 3 can attest, additional tariffs have a major impact on your bond.

With List 4 on the horizon (which covers nearly all products imported from China), it is more important than ever to gauge the sufficiency of your Customs bond.

Customs and Border Protection (CBP) is urging importers, brokers and sureties to be proactive in determining bond sufficiency based on the implementation of additional List 4 tariffs, CBP has advised that the number of insufficient bonds have almost tripled since Section 301 tariffs were first instated last year.

How does not addressing bond sufficiency impact the importer?

Shipments can be delayed if CBP deems a bond to be insufficient; an additional bond will need to be put in place before the shipment can be cleared. No one wants to see a shipment delayed, especially after it has already been subjected to an additional tariff!

While the additional tariffs are in place, bond sufficiency should be monitored closely. Importers should be prepared to discuss and act quickly to resolve the issue if their bond sufficiency is in question. CBP typically allows an importer 10 days to form a response.

Section 232 Bond Adjustments

With the removal of Section 232 duties for steel and aluminum products of Canada and Mexico, many importers are wondering if their bonds can be adjusted downward?

Remember:  Bond sufficiency is determined by the last year of import activity, therefore the duties, taxes and fees accrued under Section 232 over the last 12 months must justify a lower bond on any steel and aluminum products from Canada and Mexico. Importers who submit decrease requests on their C1 bonds should remember that the approval process is not immediate, as underwriting is required in bond limit reduction.

One last point:  Don’t forget to include antidumping/countervailing duties when calculating the bond amount and remember to increase the limit at your bank for withdrawals of Customs duties.

Our compliance experts (compliance@shapiro.com) are happy to assist you in solving any issues related to bond sufficiency.

Shapiro will continue to monitor the situation and provide status updates as they become available.