[Video] What is a U.S. Customs Import Bond?
In a short educational video, Trade Risk Guaranty walks through the basics of a U.S. Customs Import Bond; what they are, who they cover, and how they work.
There are many parts of the importing process that can confuse and overwhelm a business that is new to international trade. However, a U.S. Customs Import Bond is one of the most overlooked and, often, the most misunderstood.
In order to clarify the basics on this topic, we have put together a brief educational video explaining U.S. Customs Bonds and answering the following questions:
- What is a Customs Bond?
- Who Does a Customs Bond Cover?
- How Does a Customs Bond Work?
- What Does a Customs Bond Do?
Before diving directly into the video, let’s start with a general understanding of Customs Bonds by covering the more important points.
What is a U.S. Customs Import Bond?
A U.S. Customs Bond is a three-party contract between a bond principal, a Treasury-listed surety, and U.S. Customs and Border Protection, also known as ‘CBP’. Having a bond on file is a mandatory requirement of the process of importing in the United States and goods will not be cleared at their port of entry without one.
- Bond Principal:
The bond principal is usually a person or company that imports goods into the United States and is also known as the Importer of Record.
- U.S. Customs and Border Protection:
This is the government agency that controls, regulates, and facilitates the movement of goods into and out of the United States.
- Treasury-listed Surety:
A U.S. Customs bond is a type of Surety bond so it must be written by an insurance company. Here at TRG, we are an insurance agency that works directly with the insurance company to provide these bonds directly to the importer.
What does a U.S. Customs Import Bond Protect?
Although it is a type of surety bond, a Customs bond does not function like a typical insurance product. A Customs bond does not protect the bond principle nor does it protect the goods they import. Instead, it protects the government’s revenue stream.
A Customs bond is a financial guarantee that CBP will be paid any and all duties, taxes, and fees determined to be due during the process of importing. If the principle on the bond is unable or unwilling to pay these duties, taxes, and fees, the bond ensures that the surety that wrote the bond will pay up to the bond amount to CBP on behalf of the principle.
However, in the case of a Surety payout, the importer is not absolved of their obligation. In fact, the importer is still liable for the damages to the Surety as well as any remaining obligation to Customs.
Learn the Basics of a U.S. Customs Import Bond
Watch the following video to learn the basics of U.S. Customs Import Bonds and if your business needs one.
Did you like that video? Check out the next video in the series on the Difference Between Single and Continuous Customs Bonds.