Types and costs of customs bonds: how to get yours?
When importing from China to the US, it is necessary to purchase bonds for import customs clearance in the US. In today's article, I explain customs bonds based on the following 7 points that are of great importance to importers.
table of Contents
What is a customs bond?
How do customs bonds work?
When is a customs bond required?
What are the 2 most common types of links?
How much bail do you need?
How to obtain a customs bond?
How much does a customs bond cost?
Three more questions.
1. What is a customs bond?
Customs bonds are required when you import goods into the U.S. Simply put, a customs bond is a guarantee involving three parties: U.S. Customs and Border Protection (CBP), the importer, and the surety company. The beneficiary is U.S. Customs and the government. Customs bonds guarantee that importers will comply with all customs regulations and meet financial responsibilities for customs duties, taxes, and fines.
If importers are unable to collect the goods for any objective reason, such as bankruptcy, without paying duties, storage fees, and other expenses, once this happens, CBP will collect payment, up to the amount of the bond, from the surety company issuing the bond. The bond issuer will then take legal action to collect from the importers.
How do customs bonds work?
The insurance company pays CBP first, and CPB releases your goods. As an importer, you only have to return the money to the company later.
This way, CBP can clear the shipment covered by the bond, without the importer having to wait longer to pay. This means shorter customs clearance times and is good for your import business.
Once shipping costs exceed the value of the purchased bond, the surety company will require you to purchase a higher bond. Only after the new bond has been posted will Customs release goods that meet regulatory requirements.
2. When is a customs bond required?
As required by CBP, all individual importers or registered businesses must post a customs bond whenever the products are:
- valued at $2,500 or more and for business purposes, including even duty-free items.
- subject to the requirements of other federal agencies, such as firearms and food.
When your import meets the two conditions above, you must purchase a bond to clear customs. Otherwise, customs will reject your goods because they are not registered with U.S. Customs. Even if you have already filed an ISF declaration , you still cannot clear customs. In the meantime, you will be subject to customs penalties and pay fines.
That is, the bond is a mandatory ticket for your cargo to enter the United States, and you must complete the bond purchase four days before your vessel sails from the port of departure.
3. What are the most common types of customs bonds?
Depending on the user and specific activity, there are many different types of customs bonds, such as import bonds, foreign trade zone operator bonds, international carrier bonds, refund bonds, custody bonds, and so on.
For importers, the most common customs bonds are the following two types.
1. Annual Bonus or Continuous Bonus (CB)
As the name suggests, this type of bond only needs to be purchased once a year. If you import products frequently or your shipment is high-value, you can purchase the annual bond in your own company's name and use it to clear multiple shipments. Even if you change customs brokers , your annual bond remains valid.
From the moment the bond is issued, it is valid for one year, unless canceled by the importer or the surety company. Continuous bonds can be set to renew automatically. If renewed manually, this must be done two months before the bond's expiration. During the bond renewal process, importers and the surety company can make changes if necessary.
One more thing, an annual bond covers ISF regulations when shipping goods by sea.
2. Single Entry Voucher or Single Transaction Voucher (STB)
Also known as a single bond, the STB is designed for a batch of shipments. It is valid only once and cannot be renewed. This type of bond is suitable for buyers who import once or twice a year and whose shipment value is not high. Most surety bond providers, i.e., surety companies, issue STBs a maximum of three times a year. If this period is exceeded, it easily leads to CBP inspection.
4. How much bail do you need?
The amount or size of the voucher depends on the type of product, shipping cost, duties, taxes, and the types of vouchers you purchase.
Annual bonds cover regulated goods, but not antidumping products. The amount of this type of bond is typically 10% of the duties, taxes, and fees paid during the previous 12 months. The formula is as follows.
Annual bonus amount = 10% * (total annual fees + taxes + fees)
Please note that the minimum bond amount is $50,000. If your annual taxes and fees are $450,000, you must purchase a $50,000 bond. Once your annual taxes and fees have reached or exceeded the $500,000 benchmark, you will need a bond with an amount greater than $50,000.
Using the following calculation table, first determine the range of your annual taxes and fees, then find the required bond amount.
Let's say your total taxes and fees last year were $550,000. You'll need to round that up to the next $100,000, or $600,000. Then, find the bond amount you need: 10% * $600,000 = $60,000.
If your total taxes and fees last year were $1,550,000, you would round it up to the next $1,000,000, or $2,000,000. Then, find the bond amount you need: 10% * $2,000,000 = $200,000.
For single-entry bonds, the bond amount is calculated based on the value of the individual shipment, plus applicable duties, taxes, and fees. You can use the following formula to calculate this.
Single entry deposit amount ＝ individual shipment value + duties + taxes
It should be noted that the amount of this type of bond must not be less than $100, except when the law or regulation expressly establishes that a lower amount may be taken.
The above applies to products not under the supervision of other U.S. government agencies. If they are subject to other U.S. regulatory authorities, the bond amount must be three times the value of your products. Let's say you're importing food products under FDA supervision and the freight value is $30,000, you'll need to purchase a $90,000 bond (3*$30,000).
5. How to obtain a customs bond?
As an importer, you cannot purchase the bond on your own. It is essential to find authorized agents, which can be:
- Guarantee companies authorized by the U.S. Department of the Treasury.
- local customs agent or international carrier.
The last one is the easiest. Just follow the three steps below.
Step 1 — Find a suitable freight forwarder or customs broker.
The voucher can be purchased in the name of your own company or through transport or customs agents.
It should be noted that customs clearance is in the name of the person purchasing the customs bonds, who is also responsible for all associated matters throughout the clearance process.
If you are not qualified or do not wish to use your company name to clear goods, you may use your carrier or customs broker title.
If you are importing children's toys subject to CPSC oversight , you cannot use the freight broker title, as U.S. Customs does not accept the carrier's identity for imports. In such cases, you must obtain a bond through a local customs broker to demonstrate your qualifications to import such products. For a list of authorized customs brokers, consult your port of entry .
Step 2 — Complete the relevant documents and provide your tax identification number.
You must complete CBP Form 301, the Power of Attorney ( POA ), and the relevant documents. Your customs broker will provide the power of attorney to you, and you'll simply need to sign it. This authorizes them to file import declarations on your behalf.
Regarding CBP Form 301, you can complete it under the guidance of your broker. Only a scanned copy is required. I'm sharing a sample CBP Form 301 here for your reference.
As for the 4 areas marked in red, I will explain them in more detail.
- The first defines the voucher number assigned by CBP. It is unique.
- The second option means you must choose the type of bonus. The small box on the right side is the bonus's effective date.
- The third is specific information on the topic of U.S. import customs clearance, generally for importers.
- The fourth is the importer's tax identification number/EIN.
Step 3 — Obtain a customs bond from your agent.
Your broker will submit the appropriate import documentation, complete the online eBond application, and monitor the process. Once approved by CBP, the broker will issue a bond. You'll also receive a customs bond within 1 to 4 business days if you work with experienced customs brokers.
6. How much does a customs bond cost?
Customs bond purchase fees are based primarily on the cost of purchasing the bond from the broker for clearance.
If you purchase individual bonds, the bond fee is calculated based on the value of the individual shipment at a rate of 5 per thousand. The rate varies between brokers. Furthermore, the higher the shipment value, the higher the bond fees. For monitored products, calculate the bond fee by the shipment value*3*the rate charged.
For annual bonds, customs brokers typically charge between $500 and $1,000.
Professional customs agencies often purchase annual bonds for various product categories, such as consumer electronics. This allows products to clear customs efficiently. These additional costs are well worth it.
Three more questions
Why do I need a customs bond?
When importing goods valued at $2,500 or more into the U.S. for commercial purposes, a customs bond is required. This is a requirement enforced by U.S. Customs and Border Protection to ensure that all applicable duties and taxes are properly paid. Without this bond, customs will not release your goods.
What is a customs bond number?
The bond number is assigned by CBP. It is unique and must be completed on CBP Form 301.
Do customs bonds expire?
A single bond is a one-time security and cannot be renewed. An annual bond, on the other hand, remains valid for one year from the date of issue. You can check the status of your customs bond through the CBP ACE portal and request a renewal two months before it expires.
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