Import Bond Requirements: Single vs Continuous Coverage

I. Introduction

For any enterprise engaged in the importation of commercial goods into the United States, the concept of a U.S. Customs Bond is not merely a bureaucratic formality but a foundational requirement for lawful entry into the commerce of the country. This financial guarantee is a contract that assures U.S. Customs and Border Protection (CBP) that all duties, taxes, and fees owed to the government will be paid, and that the importer will comply with all relevant laws and regulations [1] [4].

The requirement for a bond is triggered for all commercial shipments valued over $2,500, or for any commodity subject to other U.S. government agency requirements [3] [6]. The decision an importer faces is not if they need a bond, but what kind of bond is most appropriate for their business model: a Single Transaction Bond (STB) or a Continuous Bond (CB). This choice has significant implications for an importer's cash flow, logistical efficiency, and overall compliance strategy.

In this comprehensive guide, we will dissect the critical differences between these two bond types, analyze their respective use cases, and provide actionable advice to help US importers make the most cost-effective and compliant decision for their 2024-2025 import operations.

II. The Foundation: What is a U.S. Customs Bond?

A U.S. Customs Bond is a three-party contract involving the importer (the principal), a surety company (the guarantor), and CBP (the obligee). Its primary purpose is to protect the revenue of the U.S. government and ensure that the importer of record fulfills all obligations related to the importation process [4].

The legal authority for requiring these bonds is rooted in U.S. law, specifically 19 U.S.C. § 1623, with the detailed regulations governing their use and conditions found in Title 19 of the Code of Federal Regulations (CFR), Part 113 [5]. The bond acts as a safety net for the government, covering potential liabilities such as:

• Payment of duties, taxes, and fees (including ADD/CVD).
• Production of missing documents.
• Redelivery of merchandise to CBP custody if required.
• Compliance with all CBP and partner government agency regulations.

The bond required for basic importation and entry is formally known as an Activity Code 1 bond, and it can be executed as either a single transaction or a continuous bond [5].

III. Single Transaction Bond (STB) Explained

The Single Transaction Bond (STB), also known as a Single Entry Bond, is designed to cover the liabilities associated with a single import shipment or entry [1].

Coverage and Calculation

The bond amount for an STB is calculated to cover the total value of the imported merchandise plus all duties, taxes, and fees. CBP requires the bond amount to be at least the total entered value of the merchandise plus all estimated duties, taxes, and fees [6]. For certain types of merchandise, such as those subject to Antidumping or Countervailing Duties (ADD/CVD), the bond amount may be significantly higher, often three times the total entered value of the goods [6]. The minimum bond amount for any CBP bond is $100 [5].

When to Choose an STB

The STB is the ideal choice for:

1. First-Time Importers: Businesses testing the waters of international trade or importing a single, high-value piece of equipment.
2. Infrequent Importers: Companies that import only a few times a year, typically four or fewer entries annually.
3. One-Off Shipments: Importers handling a unique, non-recurring shipment that falls outside their regular import pattern.

Practical Tip for STBs

While an STB offers flexibility for occasional importers, it is generally the more expensive option on a per-shipment basis. The premium paid to the surety company for an STB is typically a higher percentage of the bond's face value compared to a Continuous Bond. Importers should factor in the time and administrative cost of obtaining a new bond for every single entry, which can lead to delays if not managed proactively.

IV. Continuous Bond (CB) Explained

The Continuous Bond (CB) is the preferred and most cost-effective option for the majority of established US importers. A CB covers all import entries made by the importer at any port of entry across the United States for a period of 12 months [1].

Coverage and Calculation

The minimum bond amount required by CBP for a Continuous Bond is $50,000 [3]. However, the actual required amount is determined by a formula based on the importer's past activity. The bond amount must be equal to at least 10% of the total duties, taxes, and fees paid by the importer during the previous 12-month period, rounded up to the nearest $10,000 increment [2]. For example, if an importer paid $125,000 in duties and fees last year, 10% is $12,500. Since the minimum is $50,000, they would need a $50,000 bond. If they paid $550,000 in duties, 10% is $55,000, which would be rounded up to a $60,000 bond.

When to Choose a CB

A Continuous Bond is essential for:

1. Frequent Importers: Any company making more than four to five entries per year will almost always find a CB to be more economical and efficient.
2. Streamlined Logistics: A CB eliminates the need to secure a new bond for every shipment, significantly speeding up the entry process and reducing the risk of costly port delays.
3. Participation in CBP Programs: A Continuous Bond is mandatory for participation in key CBP programs, most notably the Importer Security Filing (ISF), which is required for all ocean cargo entering the U.S. [7]. Without a CB, an importer cannot file an ISF, leading to potential penalties of $5,000 per violation.

Practical Tip for CBs: Bond Sufficiency

Importers must actively manage their Continuous Bond amount to ensure Bond Sufficiency. As import volumes and duty liabilities increase, the existing bond may become insufficient. CBP can notify an importer if their bond is deemed inadequate, requiring them to increase the bond amount. This is particularly relevant in 2024 and 2025, given the volatility in global trade and the continued application of Section 301 tariffs, which can drastically increase an importer's duty liability and, consequently, their required bond amount. An annual review of the previous year's duty payments is crucial to avoid non-compliance [2].

V. Key Differences: STB vs. CB Comparison

The following table summarizes the core distinctions between the two bond types, providing a clear reference for importers evaluating their options:

Actionable Advice: The general rule of thumb is that the break-even point between the cost of multiple STBs and a single CB is typically around four to five entries per year. If your business is consistently exceeding this volume, switching to a Continuous Bond will generate significant savings and logistical advantages.

VI. Actionable Advice for Importers in 2024-2025

Navigating the complexities of customs bonds requires a proactive and informed approach. Here are three critical pieces of advice for US importers:

1. Prioritize Bond Sufficiency Review

Given the dynamic nature of global trade, including ongoing trade disputes and potential tariff changes, importers must not treat their Continuous Bond as a set-it-and-forget-it item. Annually review your total duty and tax payments from the preceding 12 months. If your import volume or the duties on your goods have increased, you must work with your surety or broker to increase your bond amount to maintain compliance. Failure to do so can result in CBP demanding an immediate increase or, in severe cases, rejecting entries [2].

2. Understand the ISF and CB Connection

For any importer utilizing ocean freight, the Importer Security Filing (ISF), often called "10+2," is mandatory. The ISF requires a valid Continuous Bond to be on file with CBP [7]. Relying on STBs for ocean shipments is not a viable long-term strategy, as it complicates the ISF process and exposes the importer to potential penalties. A Continuous Bond is the only practical solution for seamless ISF compliance.

3. Partner with a Licensed Customs Broker

The process of calculating the correct bond amount, filing the necessary paperwork (CBP Form 301), and ensuring all regulatory requirements are met is complex. A licensed customs broker acts as a crucial intermediary, possessing the expertise to accurately calculate your required bond amount, manage the application process with the surety company, and advise you on the most advantageous bond type for your specific business needs. This partnership minimizes the risk of costly errors and ensures continuous compliance with CBP regulations.

VII. Conclusion

The choice between a Single Transaction Bond and a Continuous Bond is a strategic business decision that directly impacts an importer's efficiency and financial health. While the STB serves a necessary function for the occasional importer, the Continuous Bond is the clear choice for any enterprise with consistent import volume. By securing a CB, importers gain a streamlined, cost-effective mechanism for compliance, ensuring their goods move swiftly through U.S. ports and allowing them to focus on the core aspects of their business. Dunrite Global Enterprises is committed to helping you navigate these critical regulatory requirements to achieve optimal trade compliance and operational excellence.