What Every Multinational Should Know About … The New Customs Enforcement Realities (Part I): Managing Rising Bond and Collateral Requirements

The Trump Administration’s new tariff initiatives are reshaping the importing environment in ways that extend far beyond the tariff rates themselves. Increased duties are driving higher customs bond requirements, new executive actions are signaling a more aggressive enforcement posture, and importers are facing growing pressure to ensure that their compliance programs can withstand heightened scrutiny.

This four-part series examines these developments and their practical implications for multinational companies. This first article addresses one of the most immediate consequences of the current tariff environment: rising customs bond requirements and growing demands from sureties for collateral. As tariff rates increase, many importers are discovering that customs bonds are no longer simply a compliance requirement. They have become a significant capital management, liquidity, and operational issue.

Many importers have seen their continuous bond requirements rise not because import volumes increased, but because higher duties, taxes, and fees increased the amounts counted toward bond sufficiency. Because a customs bond is a financial guarantee to CBP that duties and other obligations will be paid, higher tariff rates can automatically drive higher bond requirements even when shipment patterns remain stable.

This has created a new reality for importers with otherwise steady operations and strong compliance histories. Companies are being required to carry larger bonds, while sureties are often imposing stricter underwriting standards, additional collateral requirements, and larger letters of credit.

To help companies navigate these challenges, this article explains why rising tariff rates are leading to enhanced bonding requirements and outlines practical steps importers can take to manage the resulting financial and operational risks. Subsequent articles in this series will examine how the Administration intends to leverage enhanced customs enforcement authorities, what importers should expect from an increasingly aggressive enforcement environment, and why certain tariff-mitigation strategies that may appear attractive in the short term can create significant legal and financial exposure over the long term.

What Is a Customs Bond?

A customs bond is a three-party financial instrument. The importer serves as the principal, the surety company serves as the guarantor, and CBP, on behalf of the United States government, is the beneficiary. The bond guarantees payment of duties, taxes, fees, penalties, and compliance-related obligations arising under customs law.

Without an active bond, a commercial importer generally cannot secure release of goods through formal entry procedures. There are two primary bond types:

• Single transaction bonds, which apply to one entry only; and
• Continuous bonds, which cover all entries made during a twelve-month period and are the standard bond vehicle for regular importers.

Most commercial importers with ongoing entry activity use a continuous entry bond.

How CBP Calculates the Continuous Bond Amount

CBP generally sets the required amount of a continuous importer bond using a formula based on the importer’s historical duties, taxes, and fees. The baseline calculation is typically 10% of the total duties, taxes, and fees paid or payable over the preceding twelve months, subject to minimum thresholds and rounding rules.

CBP reviews bond sufficiency on a rolling twelve-month basis. If duties, taxes, and fees rise significantly during the year, the agency may determine that the existing bond is insufficient and require an increase before the bond’s anniversary date.

After CBP applies the 10% formula, the number is not left as an exact figure. The amount is subject to a minimum and then rounded upward under fixed rules, with the key points being as follows:

• Minimum requirement: The standard minimum continuous importer bond is $50,000.
• General rounding rule: Bond amounts are generally rounded up to the nearest $10,000 increment.
• Higher-duty accounts: For importers whose annual duties, taxes, and fees exceed $1 million, calculations may be rounded up in $100,000 blocks.

Because CBP rounds upward, the final required bond can exceed the raw 10% calculation. To illustrate:

• If an importer paid $250,000 in duties, taxes, and fees over the prior year, 10% would equal $25,000, but the importer would still need the $50,000 minimum bond.
• If an importer paid $900,000, 10% would equal $90,000, which would generally become the required bond amount.
• If an importer paid $1,150,000, 10% would equal $115,000. Depending on the applicable rounding convention for accounts above the $1 million threshold, the required bond could increase materially above that raw figure.

How Importers Calculate Their Required Continuous Entry Bond Amount

To estimate whether a current continuous bond remains sufficient, importers generally need four core pieces of information:

• the total duties, taxes, and fees paid over the prior twelve months;
• the current trend in duty exposure, including expected tariff increases;
• confirmation of the sufficiency figures reflected in CBP systems, often obtained through the ACE portal or through a licensed customs broker; and
• a reasonable projection of estimated imports and applicable tariffs going forward one year.

It is important to focus on actual duties, taxes, and fees paid to the government, not the entered value of imported merchandise. In a period of tariff volatility, duty trend data may be more important than shipment count alone.

The recent wave of tariff actions has intensified the bond issue because bond sufficiency is directly tied to duties, taxes, and fees. When tariffs increase through executive orders, trade remedies, new Section 301 announcements, or due to new antidumping/countervailing duty orders, the bond formula rises mechanically. This means an importer can face a bond increase even where business volume remains flat.

That is one reason the issue is expected to become even more pronounced if additional Section 301 tariffs take effect. Importers that maintain bonds at or near the minimum required level may face repeated insufficiency notices if expected tariff increases are not built into their forecasts.

Why Surety Underwriting Often Exceeds the CBP Formula

Many importers are finding that the surety market is reacting more aggressively than CBP’s regulatory formula. CBP’s bond requirement is largely mechanical. It is based primarily on historical duties, taxes, and fees and projected bond sufficiency under the agency’s rolling twelve-month methodology. Sureties, however, are not limited to that formula. They underwrite to worst-case exposure, timing risk, collectability risk, and the possibility that liabilities will remain open or increase well after entries are filed.

That distinction is especially important in the current tariff environment. CBP may calculate a bond amount using standard historical metrics, but a surety may conclude that the importer’s actual risk profile is materially higher because of tariff volatility, the possibility of retroactive duty increases, or the extended tail associated with unliquidated entries, audits, protests, and post-entry adjustments. In practice, this means an importer may technically meet CBP’s bond formula and still be asked by the surety to provide collateral, a letter of credit, indemnity support, or additional financial documentation.

In evaluating an importer, sureties may consider:

• Unliquidated entries. Open entries extend the period during which liability can change, particularly where final duty treatment remains uncertain.
• Tariff volatility. Rapid changes in applicable duty rates can increase projected exposure even where shipment volume is stable.
• Financial statements, liquidity, and working capital. Sureties assess whether the importer has the financial strength to absorb higher duty obligations or reimburse the surety if a claim is paid.
• Industry risk. Certain sectors are viewed as higher risk because of enforcement activity, trade remedy exposure, valuation disputes, or country-of-origin complexity.
• Prior claims history. Past bond claims, compliance issues, or payment problems can materially affect underwriting.
• Concentration of sourcing or commodity exposure. Heavy dependence on a single country, supplier base, or tariff-sensitive product category can increase perceived risk.
• Exposure to trade remedies such as antidumping and countervailing duties. AD/CVD issues remain among the most significant drivers of conservative surety underwriting.
• Section 232 exposure. Imports of steel, aluminum, and derivative products, as well as products subject to quota, melt-and-pour, or derivative classification questions, may receive heightened scrutiny.
• Section 301 and IEEPA-related exposure. Sureties may evaluate whether current sourcing patterns are vulnerable to sudden tariff increases or changes in executive trade actions.
• Classification, valuation, and origin complexity. Where the tariff treatment depends on difficult classification issues, substantial assists, transfer pricing questions, or country-of-origin determinations, sureties may see greater risk of post-entry adjustments.
• Importer maturity and business history. Newer companies, rapidly growing importers, and businesses without a long financial or compliance record may face more demanding underwriting.
• Open audits, investigations, or reconciliations. Participation in reconciliation programs, pending Focused Assessments, or other agency reviews can increase concern about unresolved exposure.
• Customs broker and compliance controls. Weak internal controls, limited visibility into ACE data, or lack of a documented compliance program may also affect underwriting outcomes.

Sureties may also react strongly to other indicators of contingent customs liability. These can include:

• significant use of first sale valuation, transfer pricing, or other valuation methods that could be challenged later;
• repeated or high-value post-summary corrections or protests;
• substantial reliance on free trade agreement claims or special tariff programs where eligibility may later be questioned;
• imports involving forced labor, sanctions, export controls, or admissibility concerns, which may signal broader compliance risk;
• high-volume imports from jurisdictions subject to changing trade policy or geopolitical risk; and
• evidence that the importer routinely sizes bonds close to the minimum required threshold rather than building in capacity for duty fluctuations.

The result is that surety underwriting frequently exceeds the narrow CBP formula. CBP’s approach establishes the minimum amount of bond security the agency expects based on historical duties and projected exposure. The surety market, by contrast, prices and underwrites the risk that liability will rise, remain unresolved, or become difficult to recover from the importer. In a period marked by tariff volatility, Section 301 uncertainty, Section 232 complexity, and ongoing AD/CVD enforcement, that distinction has become increasingly important. For many importers, the real constraint is no longer CBP’s minimum bond formula alone, but the broader private-market underwriting standards applied by the surety.

Why AD/CVD Orders and Section 232 Duties Have an Outsized Bond Impact

Importers of merchandise subject to antidumping and countervailing duties often face the most demanding bond and underwriting conditions. AD/CVD exposure creates both duration risk and magnitude risk: entries can remain unliquidated for years because of administrative reviews, litigation, and scope disputes, and final duty liability can increase materially above the cash deposit rate paid at entry. That long-tail exposure is difficult for sureties to quantify and close out, which is why AD/CVD entries frequently trigger heightened scrutiny, larger collateral demands, and, in some cases, bond structures more stringent than the standard continuous bond formula.

This risk is not limited to importers with obvious AD/CVD exposure. Companies operating in sectors commonly affected by AD/CVD orders may also be viewed as higher risk because of the possibility of scope challenges, supplier-specific rate changes, classification disputes, and post-entry adjustments. As a result, even indirect AD/CVD exposure can influence a surety’s willingness to write or expand a bond without substantial security.

Section 232 duties also can have a disproportionate effect on bond requirements, particularly for importers of steel, aluminum, copper, and derivative products. In the current environment, Section 232 is not simply an added duty line item; it is a moving regulatory framework shaped by shifting tariff rates, evolving derivative product coverage, product exclusions, country-specific treatment, quota arrangements, and origin-related requirements. For steel and aluminum in particular, questions involving classification, derivative scope, melt-and-pour rules, smelt-and-cast rules, and the interaction of Section 232 with other duty regimes can make ultimate liability less predictable. Copper-related measures and potential expansions add another layer of uncertainty for importers whose products may fall within changing enforcement priorities or derivative coverage analyses.

That uncertainty matters for bond purposes. Because continuous bond amounts are tied to duties, taxes, and fees, changes in Section 232 treatment can increase the bond amount directly. Beyond the formula itself, sureties may take a more conservative view where imports are exposed to classification disputes, changing scope interpretations, or policy shifts affecting steel, aluminum, copper, and related derivatives. In those cases, the bond amount may reflect not only current duties paid, but also the broader uncertainty associated with future tariff treatment, post-entry review, and unresolved exposure.

Collateral Demands Are Becoming More Common

As bond amounts rise and underwriting standards tighten, more importers are being asked to provide collateral in order to keep bonds in place. Typical forms of collateral include:

• cash collateral;
• irrevocable letters of credit;
• corporate guarantees;
• personal indemnities; or
• combinations of the above.

The letter of credit is the most common structure because it secures the surety’s risk without requiring immediate cash payment to the surety. It does, however, tie up bank capacity, trigger fees, and can affect broader financing arrangements. Cash collateral directly reduces liquidity. In some cases, importers may find that the surety’s collateral demand approaches or even exceeds the amount of the bond required by CBP. This can become a significant capital allocation issue, particularly for smaller and mid-sized importers.

Stacking Liability and Extended Exposure

One of the most important concepts in customs bond underwriting is stacking liability. Each continuous bond term creates a separate period of exposure. When a bond renews annually, liabilities from prior bond periods do not disappear immediately. Entries from earlier periods may remain unliquidated or subject to review for years.

From the surety’s perspective, this means exposure can accumulate across multiple bond periods until all entries are liquidated and no further adjustments are possible. The stacking effect is one reason sureties may demand more collateral than the CBP formula alone would suggest.

This issue is particularly relevant where importers make repeated bond increases mid-term. Frequent upward adjustments can complicate the surety’s risk profile and raise concern about expanding open exposure.

Cash in Lieu of a Surety Bond

Importers are not limited to traditional surety-backed bonds. One lawful and sometimes overlooked alternative is cash in lieu of a surety bond. Under this approach, the importer files the standard customs bond form, commonly Form 301, and secures the bond with cash deposited directly with the U.S. Treasury rather than through a private surety.

This can eliminate private underwriting concerns, including collateral multiples, letters of credit, or personal indemnity requirements. However, the tradeoff is that the importer’s own cash is tied up for the life of the bond and potentially longer while liabilities remain open. The funds generally do not earn interest, and additional cash may need to be posted if CBP later determines that the bond amount must increase.

For some companies, especially where surety underwriting has become difficult or costly, this may still be a practical option.

Hybrid Funding Strategies

Some importers use a hybrid approach, combining surety support with partial cash collateral or bank-issued letters of credit. This can help preserve liquidity while addressing underwriting concerns. Depending on the importer’s balance sheet, trade profile, and banking relationships, hybrid structures may offer a more flexible path than an all-cash or fully collateralized surety model.

Practical Steps for Importers

Given the current environment, importers should consider taking the following steps:

• Review current bond sufficiency using rolling twelve-month duties, taxes, and fees;
• Model expected duty exposure under current and anticipated tariff actions, including Section 301 developments;
• Confirm CBP bond sufficiency data through ACE or a licensed customs broker;
• Prepare internally for collateral requests, including coordination with finance, treasury, and lending partners;
• Evaluate whether mid-term bond increases are likely and whether a larger initial bond may be more prudent;
• Assess AD/CVD exposure carefully, including indirect commodity or sector risk;
• Consider whether cash in lieu of a surety bond is viable if private underwriting becomes too restrictive; and
• Explore hybrid structures that balance liquidity preservation against surety demands.        

Continuous customs bond requirements are driven first by CBP’s formula, which is linked to duties, taxes, and fees, and second by the private surety market’s reaction to risk, timing, and collectability. Elevated tariffs imposed through executive authority in 2025 have increased baseline bond requirements for many importers even where shipment volumes remain stable. At the same time, sureties have responded with tighter underwriting, more collateral demands, and greater sensitivity to open liability and tariff volatility.

For importers, especially smaller and mid-sized companies, customs bond planning is now a strategic issue that intersects with compliance, liquidity, and overall capital management. Companies that understand how bond amounts are calculated, how sureties evaluate exposure, and what options exist for satisfying bond requirements will be better positioned to manage risk and avoid disruption as tariff pressure continues to build.

Of course, importers should understand that the financial pressures associated with rising bond and collateral requirements are only one part of the broader customs enforcement landscape. In addition to CBP’s increased scrutiny of bond sufficiency, duty exposure, and importer compliance, the Department of Justice is becoming a more prominent player in tariff enforcement. The next two articles in this series will focus on the rapidly rising enforcement risks in the importing area.

Would you like more practical compliance tips like these? The Foley International Trade & National Security Team is monitoring all international trade, enforcement, and compliance developments, which we post as they occur on our Tariff & International Trade Resources blog. Click Here To Register for our email list to receive future emails and practical international regulatory compliance tips, including our biweekly What Every Multinational Should Know articles.

Our white paper on Managing Import and Tariff Risks During a Trade War outlines a 12-step plan to provide practical steps to help importers navigate the tariff and international trade risks in the current tariff and trade environment, while the companion white paper on Managing Supply Chain Integrity Risks provides practical advice to deal with heightened supply chain risks pertaining to goods imported into the United States, including the increasing use of detentions by Customs.