Airforwarders Association FORWARD Magazine, Fall 2018

17 Fall 2018 Q Forward Magazine It is also critically important for bond holders to be aware of contractual arrangements where they have agreed to be the importer of record, or where a contract legally requires one party to reimburse Customs duties to another. The bond principal and/or importer of record is the party that is directly impacted by these higher tariffs. Bond increases come with a financial cost, but more critically, if a bond is rendered insufficient, it could shut down the importer’s entire operation. If a bond holder is unaware of a duty increase that imperils the sufficiency of its bond, its entire business is in jeopardy. Of course, CBP’s goal is not to drown the trade in bond increases or to impede trade, and they will work with your bond provider to ensure sufficient bonding as long as the importer, customs broker, and surety bond provider work together to be proactive. To take a more proactive approach to bond sufficiency, customs broker and importers are strongly encouraged to: 1. Review all contracts where the bond holder might be acting as importer of record for another party to ensure that all imports are properly accounted for 2. Review imported product classifications with a professional to ensure the duties being paid are correct 3. Conduct long-term projections of anticipated importations and the associated duties, taxes, and fees Import projections are especially important as they allow the importer and customs broker to determine an appropriate bond amount for the coming year. In most instances, the bond amount must cover 10% of duties, taxes, and fees for the next twelve months. The bond amount that CBP mandates is always factored against the prior 12 months. Only the importer can project future entries and therefore accurately calculate the impact of the increased tariffs. To avoid insufficiency notices from CBP and mid-term bond increases, the importer should consider the following formula when determining an accurate bond amount: Establish the past 12 months of duties, taxes and fees, apply to potential tariff increases, and then adjust based on the anticipated percent of change in imports. By actively working together to determine the proper bond amount, the importer and its customs broker can alleviate some of the pain caused by the trade wars. Customs brokers can always reach out to their surety provider for various reports to assist in their efforts.