Customs Bonds Explained: Single Entry vs Continuous Bond
What Is a Customs Bond?
A customs bond is a financial guarantee filed with US Customs and Border Protection (CBP) to ensure the payment of duties, taxes, and fees, and the performance of obligations imposed by customs laws and regulations. The bond is a three-party agreement among the principal (the importer or other obligated party), the surety (an insurance company approved by the Department of the Treasury), and the obligee (the United States government, represented by CBP).
The legal authority for customs bonds appears at 19 U.S.C. 1623 and the implementing regulations at 19 CFR Part 113. CBP Form 301 is the standard customs bond form. The current list of approved sureties is published by the Treasury Department’s Bureau of the Fiscal Service at fiscal.treasury.gov/surety-bonds/list-certified-companies.
If the principal fails to meet customs obligations (for example, by not paying assessed duties, by violating ISF requirements, or by failing to redeliver merchandise upon CBP demand), CBP demands payment from the surety up to the bond limit. The surety then seeks reimbursement from the principal.
When Is a Customs Bond Required?
A customs bond is required for virtually every formal entry of merchandise into the United States. Specific situations requiring a bond include:
Entry of merchandise: Any commercial entry valued over $2,500, or any entry of goods subject to other federal agency requirements, requires a bond securing duty payment.
Importer Security Filing (ISF): The 10+2 ISF filing requires a bond to secure penalty exposure for late or inaccurate filings.
Foreign Trade Zone operation: FTZ operators must post operator bonds.
Bonded warehouse operation: Class 1-11 bonded warehouse operators must post warehouse proprietor bonds.
Custodian bonds for in-bond movements: Carriers transporting cargo under in-bond procedures require custodian bonds.
Drawback claimant bonds: Required for accelerated drawback payment programs.
Bond Activity Codes
CBP categorizes bonds by activity code defining the type of obligation secured. The two most common activity codes for importers are:
Activity 1 (Importer/Broker Bond): Covers entry of merchandise, payment of duties and taxes, ISF compliance, and most general importation obligations. This is the bond most importers think of as their “customs bond.”
Activity 2 (Custodian of Bonded Merchandise): Covers in-bond transportation, FTZ operation, bonded warehouse operation, container station operation, and similar custody obligations.
Activity 3 (International Carrier): Covers vessel and aircraft operators’ manifest obligations.
Activity 4 (Foreign Trade Zone Operator): Specific to FTZ operators.
Activity 1 is the bond type discussed throughout the rest of this guide. Importers needing custodian or carrier bonds should consult their broker.
Single Entry Bond (SEB)
A Single Entry Bond covers a single import transaction. It is filed at the time of that specific entry and expires when the entry liquidates and all obligations are satisfied.
How the amount is calculated: The bond amount equals the total duties, taxes, and fees on the entry, plus the value of the goods if they are subject to other federal agency requirements (FDA, USDA, EPA, etc.). The minimum bond amount is the value of the merchandise for shipments subject to government quotas, AD/CVD, or other special programs.
Cost: Typically $4-7 per $1,000 of bond face value, with minimum charges of $35-75 per bond. A $10,000 single entry bond commonly costs $50-75.
When to use: First-time or infrequent importers (fewer than 5-10 entries per year), spot shipments outside the importer’s normal business, or shipments to test a new product or supplier.
Disadvantages: Higher per-shipment cost than continuous, must be filed for every entry, and does not cover ISF or other ongoing obligations between entries.
Continuous Bond
A continuous bond covers all of the importer’s entries and other Activity 1 obligations during a 12-month period. The bond renews annually unless terminated.
How the amount is calculated: The minimum continuous bond is $50,000. The required amount equals 10% of the total duties, taxes, and fees paid in the most recent 12-month period (rounded up to the nearest $10,000). For new importers without a 12-month history, the bond is set at $50,000 and adjusted as activity is established.
Examples:
1. Importer paying $400,000 in annual duties: 10% = $40,000, but minimum is $50,000, so continuous bond is $50,000.
2. Importer paying $750,000 in annual duties: 10% = $75,000, rounded up to $80,000.
3. Importer paying $4,200,000 in annual duties: 10% = $420,000, rounded up to $420,000.
Cost: Typically $250-600 per year for the minimum $50,000 bond, scaling up roughly linearly with bond size. A $500,000 continuous bond commonly costs $2,500-4,000 per year.
When to use: Most importers with 5+ entries per year. The break-even point versus single entry bonds is typically around 5-10 entries annually.
Advantages: Lower per-entry cost, automatic ISF coverage, simplified entry processing (no per-entry bond filing), and easier supplier and customer onboarding.
Bond Sufficiency and Insufficient Bond Letters
CBP monitors continuous bond sufficiency continuously through the Automated Commercial Environment. When duty activity increases, the existing bond can become insufficient.
How CBP detects insufficiency: ACE compares 10% of the trailing 12-month duty total to the current bond amount. If the calculated requirement exceeds the bond face value, ACE flags the bond as insufficient.
Bond insufficient letter: CBP issues a written notice to the importer (and surety) requiring an increased bond. The notice typically allows 30 days to rider the existing bond to a higher amount or replace it with a larger bond.
Consequences of insufficiency: If the importer fails to increase the bond within the deadline, CBP can refuse entry of subsequent shipments, place the bond on a manual review list (causing entry delays), or terminate the bond.
2025-2026 elevated risk: Section 232, Section 301, and IEEPA reciprocal tariffs have substantially increased many importers’ effective duty rates. Many importers have received bond insufficient letters in 2025-2026 because their duty exposure increased without proportional bond increases. Proactive bond review is recommended whenever an importer experiences a tariff regime change.
Bond Riders, Terminations, and Replacements
Riders: Modifications to an existing bond, used to change the bond amount, add a co-principal, change addresses, or add covered operations. Filed on CBP-prescribed rider forms through the surety.
Terminations: Either the principal or the surety can terminate a continuous bond with 30 days written notice to CBP. Termination becomes effective at the end of the notice period. Underlying liability for entries made before termination continues until liquidation.
Replacements: When the importer changes surety companies or reorganizes, a replacement bond is filed and the old bond is terminated simultaneously. CBP requires bond continuity to avoid lapses in coverage.
Special Bond Requirements
Certain situations require additional or specialized bonds beyond the standard Activity 1 importer bond.
AD/CVD case bonds: Some Anti-Dumping and Countervailing Duty cash deposit obligations require enhanced bond coverage above the normal 10% calculation.
OGA bonds: When entries are subject to FDA, EPA, USDA, FCC, NHTSA, or other federal agency requirements, the bond must cover potential redelivery, destruction, or remediation costs.
Quota merchandise: Imports under quota require bonds at 100% of the merchandise value to secure quota compliance.
Single transaction ISF bond: Importers without a continuous bond can file a single transaction ISF bond for one-off shipments at typical cost of $50-150 per ISF.
How to Obtain a Customs Bond
Importers obtain customs bonds through licensed customs brokers (most common) or directly through approved surety companies. The application process typically requires:
1. Completed CBP Form 301 (signed by importer principal officer)
2. Importer details: legal name, IRS EIN, business address, ownership structure
3. Estimated annual import volume and duty payment for continuous bonds
4. For new importers, basic underwriting information; for high-volume importers, financial statements may be required
Most bonds are issued within 1-3 business days. New importers can typically be set up before their first shipment.
Frequently Asked Questions
Do I need a bond if my customs broker has one?
Yes. The broker’s bond covers only the broker’s own obligations. Each IOR must have its own bond, although the broker can arrange the bond on the importer’s behalf.
Can I use the same bond for multiple companies?
A single bond can name multiple co-principals, but each entity must be specifically named on the bond. Adding a co-principal requires a rider.
What happens to my bond if I stop importing?
The bond can be terminated with 30 days written notice. Liability continues for any entries made before termination until those entries are fully liquidated.
Are customs bonds tax-deductible?
Bond premiums are generally deductible as a business expense. Consult a tax advisor for specifics.
Will tariff increases trigger a bond insufficient letter?
Yes. A 25% IEEPA reciprocal duty on a $10 million annual import volume creates $2.5 million in additional duty, which adds $250,000 to the 10% bond requirement. Bond insufficient letters are common after tariff regime changes.
How ExFreight Helps Importers Manage Customs Bond Requirements
ExFreight’s licensed US customs brokerage team places single entry and continuous bonds, monitors bond sufficiency under current tariff exposures, and processes bond riders when duty activity increases. With Section 232, Section 301, and IEEPA tariffs all stacking on many shipments, proactive bond management is critical to avoid CBP entry refusals.
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