US importers have been forced to significantly increase the amount of bond protection they are required to put up to cover anticipated tariffs amid the upheaval in trade policy driven by the Trump administration, trade compliance professionals say.

That financial impact is huge given the rapid increase and variability of tariffs assessed over the last five months, largely because importers must predict the amount of tariffs they will pay in the future in order to calculate the bond coverage they need to maintain. In most cases, they're also required to provide collateral that impacts their cash flow.

US Customs and Border Protection (CBP) requires importers to maintain a bond amount of at least 10% of the duties they estimate they will owe over a 12-month period, with mandated minimum continuous coverage of $50,000.

“The sufficient bond amount is based on a rolling period of the prior 12 months,”said Sandy Coty, director of operational development at customs broker AN Deringer.“Customs monitors sufficiency on a monthly basis. Because recent months have higher duties than 12 months ago, the sum of the past 12 months is growing, and that growth is eventually causing the current bond amount [for most importers] to be insufficient based on CBP's 10% rule.”

Coty said an importer with 0% duties on $1 million of what's known as“entered value”of imports each month would have only needed a $50,000 bond. At 10% to 25% tariffs now, after a few months, the importer would eclipse $500,000 in duty paid, meaning its $50,000 bond would no longer be sufficient.

“They must plan for the 12 months under current rates to avoid the next bond becoming insufficient,”she said.“The problem is, it's difficult to predict where the tariff will be in the future, or what the sales volume may be. Projecting a bond amount can be difficult in these uncertain times.”

To put in context the extent that increased tariffs are burdening importers, Coty said more than 90% of continuous bonds were for the minimum $50,000 amount prior to January.

Jason Cook, CEO of Ardent Global Logistics, said many importers are just beginning to understand the impact of the bond requirements because they never needed to maintain more than the minimum amount required with tariffs at relatively low levels.

“Sureties are asking for full letters of credit [for collateral],”he said.“This is starting to happen right now.”

Rapid increase in bonds

To account for increased duties owed, importers generally need to secure a new bond, which is typically done in increments of $10,000. For example, an importer that held the minimum bond amount to cover no more than $500,000 in estimated duties and tariffs owed would have to increase it to $60,000 if it estimated it now owes between $500,001 and $600,000.

The bond amount is generally rounded up to the nearest $10,000 for amounts under $1 million and to the nearest $100,000 for amounts over $1 million. Larger bonds for companies with weak balance sheets or operating losses may require collateral as well, Coty said.

“Importers are typically granted a 30-day grace period to bring their surety to suitable levels,”customs broker Livingston International said in a blog about the increasing bond requirements.“Bonds that are not adequately increased within the 30-day period will likely be terminated and the importer will no longer have surety to cover their customs duties. Should this occur, goods will be held at the border until the importer secures adequate surety or pays the duties in full.”

For most US importers, the amount of bond they need to maintain will far surpass what was required prior to the Trump administration ratcheting up tariffs. Rob Burdette, vice president of strategy at customs broker Shapiro, said clients that previously had bonds of $100,000 or higher are having to triple the size of those bonds, with the highest increase he's seen at 15 times the previous levels.

Bond levels have increased so quickly that CBP on July 21 circulated a message to customs brokers that it was forced to update its system for collecting bonds to accommodate estimated tariff“owed” amounts with 10 digits ($1 billion or more).

‘Stacking’bonds creates new challenges

The headache for importers doesn't stop at having to merely increase the amount of their bonds. Importers cannot just increase their existing bonds; they must write new bonds for the higher value required but don't get a refund on the existing bond. And the“stacking”of bonds creates liability complexity that can be tricky to manage, as well as collateral demands that place financial pressure on importers.

For instance, if an importer secured a $100,000 bond on Nov. 1, 2024, that renews on the same date in 2025, the importer's bond will become insufficient before that date due to higher tariffs. CBP would force the company to get a new bond through an insufficiency notice, Burdette said.

“Even if the importer acts on their own accord to increase the bond before the insufficiency, it still creates the stacking,”he said.“In this case, starting with the $100,000 bond, then having to add the $300,000 bond creates an aggregate bond liability of $400,000. Typically bonds over $200,000 require financials, so now, instead of your financials being able to support $100,000, it must support $400,000.”

Burdette said the stacking is leading to financial exposure where“importers get in a situation where they are funding their own risk with collateral.”

The collateral required is generally equal to the bond amount when more than $100,000, usually in the form of a cash deposit or a letter of credit, said Paul Diedrich, compliance officer at Ardent Global Logistics.

“Importers have always needed a bond,”he said.“In the past some brokers may have allowed the use of their bonds, but that practice is now gone. The biggest new issue is the bond amount that is required.”

In terms of the premiums importers are paying to secure those bonds, the general guideline is that it costs 1% of the amount of the bond, with premiums increasing proportionally to bond amounts, sources told the Journal of Commerce.

In most cases, the collateral required to support the higher bonds is the bigger financial burden.

“I tell our customers that paying a little extra bond premium to get a larger bond with some wiggle room is much cheaper than the cost of paying for a [letter of credit from a bank] or having their cash tied up in bond collateral,”Burdette said.