The increased use of trade remedy duties like Section 301, Section 232 and antidumping and countervailing duties have led to significant and impactful changes in how much importers pay to bring in their goods. Those trade remedy duties have led to a problem that had, until now, been of little concern: bond stacking.
What exactly is bond stacking, and why should you be concerned?
A bond, or customs surety bond, is a legal agreement that guarantees an importer will pay all necessary taxes, duties, fees, and penalties to Customs and Border Protection (CBP) related to bringing goods into the USA.
Bond values are generally based on 10% of the expected total taxes, duties and fees paid over a 12-month period on a rolling-forward basis. Should the value of those taxes, duties, and fees increase, a new bond may be required.
Bond stacking occurs when an importer has multiple customs bonds active simultaneously. This situation often arises when a new bond is secured prior to liquidation (+90 days) of all the entries secured by the previous bond(s). While it might seem harmless, bond stacking can lead to significant complications and unexpected costs for importers.
Bond stacking became a larger issue – and problem – as Section 301 duties imposed on imports from China added trade remedy duties of 7.5 – 25% ad valorem to certain goods. As a result, importers who had the minimum bond required by CBP, for $50,000, had to re-calculate how much duty they would need to pay.
As their import volumes increased, and the trade remedy duties magnified, the bonds they secured were insufficient and they needed to obtain even larger bonds, hence the term “bond stacking”.
The primary issue with bond stacking is that it can result in an importer’s inflated liability, and it can happen quickly. CBP views each active bond as a separate obligation, multiplying an importer’s liability. This means importers could be on the hook for far more than they anticipated or budgeted for.
Moreover, bond stacking can complicate the claims process. If a claim arises, it may be unclear which bond should respond, leading to delays and potential disputes between sureties. This uncertainty can leave importers in a precarious position, potentially facing penalties or disruptions to their supply chain, and often both.
We understand the intricacies of customs bonds and the risks associated with bond stacking. Our licensed customs brokers and import teams work closely with you to develop tailored solutions that minimize risk and ensure compliance. We can help by:
- Auditing your current bond situation.
- Developing a strategy to phase out overlapping bonds.
- Implementing best practices to prevent future bond stacking.
- Coordinating with sureties to clarify liability and claims processes and, if necessary, identifying new surety partners who will be receptive to creative, yet permissible, solutions.
- Working to resolve or mitigate a penalty when necessary.
By partnering with Alba, you’re not just getting a logistics services provider and customs broker – you’re gaining a strategic ally already working with hundreds of importers, many of whom may have or had identical experiences with the bond stacking challenges you may be facing. Let us help you reduce your liability, return your operating capital, and prevent the need for bond stacking again in the future.
