CUSTOMS BONDS | 2026-10-31

Continuous Customs Bond vs. Single-Entry Bond: How CBP Sizes an Importer’s Bond and What California Importers Should Carry

How the 10 percent formula, the $50,000 floor, bond insufficiency notices, and PGA sizing rules decide which bond a California importer needs

Every commercial shipment that enters the United States has to be secured by a customs bond, and the choice between a continuous bond and a single-entry bond is one of the first compliance decisions a California importer makes. The bond is a three-party guarantee that CBP will be paid the duties, ta

Why a customs bond exists at all

A customs bond is a contract among three parties: the importer (the principal), a surety company approved by the U.S. Treasury, and U.S. Customs and Border Protection (the obligee). It guarantees that the government will collect everything an entry owes even if the importer cannot or will not pay. The statutory authority to require bonds and other security is 19 U.S.C. § 1623, which lets the Secretary of the Treasury demand a bond in whatever amount is necessary to protect the revenue and ensure compliance with the customs laws. The implementing regulations live in 19 C.F.R. Part 113, and the sizing rules that most importers care about are in 19 C.F.R. § 113.13.

The bond covers more than ordinary duties. It secures estimated duties, taxes, and fees on each entry; antidumping and countervailing duties; liquidated damages when an importer breaches a bond condition; and penalties that CBP assesses for late filings, missing documents, or failure to redeliver merchandise. When the importer defaults, the surety pays CBP up to the bond's penal amount, and the surety then has a contractual right of reimbursement against the importer. That reimbursement right is why an importer who treats the bond as a routine formality can end up personally liable for a six-figure surety claim years after an entry liquidates.

The two bond types in plain terms

Single-entry (single-transaction) bonds

A single-entry bond, often called a single-transaction bond or STB, covers exactly one import transaction at one port. It is the natural choice for an importer who brings in one shipment, an occasional shipment, or a shipment through a port where the importer has no continuous bond on file. Because the bond covers only that one entry, the surety writes it for a penal amount tied to that shipment's value and duty exposure, and the premium is a one-time charge rather than an annual one.

Continuous bonds

A continuous bond, designated Activity Code 1 on CBP's bond application, covers all of an importer's entries at all U.S. ports for a twelve-month term and renews automatically until terminated. For any importer bringing in more than a handful of shipments a year, the continuous bond is both cheaper per entry and far more convenient, because a single bond on file lets merchandise clear at any port without arranging new security shipment by shipment. The continuous bond also secures Importer Security Filing (ISF) obligations for ocean cargo, which a basic single-entry import bond does not.

How CBP sizes a continuous bond: the 10 percent formula

Under 19 C.F.R. § 113.13(b), CBP sets a continuous importer bond at an amount sufficient to protect the revenue and ensure compliance. In practice CBP applies a published formula built around the duties, taxes, and fees the importer paid in the most recent twelve months:

Take the total duties, taxes, and fees paid in the prior twelve-month period.
Multiply that figure by 10 percent.
Round the result up — to the next $10,000 increment if the figure is under $1 million, or to the next $100,000 increment if it is $1 million or more.
Apply the minimum continuous bond amount of $50,000. No continuous importer bond is written below that floor.

So an importer who paid $600,000 in duties, taxes, and fees last year needs a continuous bond of at least $60,000 (10 percent, rounded). An importer who paid only $120,000 still lands at the $50,000 minimum rather than the $12,000 the raw formula would suggest. An importer whose duty bill has climbed to several million dollars will see the bond requirement climb into the hundreds of thousands. The practical lesson is that a continuous bond is not a fixed number for life. As an importer's duty exposure grows — often sharply, when Section 301 China tariffs or antidumping duties attach to its product — the bond that was adequate last year can become too small, which is where bond insufficiency notices come in.

How CBP sizes a single-entry bond

A single-entry bond is sized to the specific shipment rather than to a year of history. For ordinary merchandise, CBP sets the STB amount at the total entered value of the merchandise plus all duties, taxes, and fees the entry owes. That makes the STB amount track the actual exposure of the one transaction it secures.

Two categories of merchandise are sized more aggressively:

Partner Government Agency (PGA) merchandise. When a shipment is subject to the requirements of another federal agency — the FDA for food, drugs, and devices; the EPA for regulated chemicals and vehicles; the USDA for agricultural goods — CBP generally sets the single-entry bond at three times the entered value of the merchandise. The larger amount reflects the cost and risk if the goods must be redelivered, re-exported, or destroyed because they fail the other agency's requirements.
Quota-class goods and AD/CVD merchandise. Goods subject to absolute or tariff-rate quotas, and goods subject to antidumping or countervailing duty orders, carry their own sizing rules that can push the STB well above the ordinary value-plus-duties figure, because the potential duty rate on AD/CVD goods can be a large multiple of the ordinary rate.

For an importer who runs AD/CVD merchandise through a California port even a few times, the per-shipment cost of single-entry bonds sized for that exposure often makes a continuous bond the cheaper path quickly.

Bond insufficiency: when CBP forces a replacement

Because the continuous bond amount is pegged to a trailing twelve months of duty payments, a continuous bond that was correctly sized can become inadequate as the importer's volume or duty rate rises. CBP monitors this and issues a bond insufficiency notice — sometimes called a bond "stacking" or "saturation" determination — when the outstanding, unliquidated exposure on open entries approaches or exceeds the bond's penal amount.

An insufficiency notice typically gives the importer a short window, often around 15 days, to place a new, larger bond. If the importer does not replace the bond in time, CBP can treat new entries as unbonded, which means merchandise will not be released until adequate security is posted. For a just-in-time California supply chain, a bond that lapses into insufficiency at the terminal is a serious disruption. The defense is to monitor duty exposure against the bond amount throughout the year, not only at renewal, and to size the bond with headroom when tariffs are rising.

CBP's discretion to require more under § 113.13(d)

The formula is a floor for CBP's analysis, not a ceiling. Section 113.13(d) lets CBP require a larger bond than the formula produces when the agency's own review of the importer's compliance history, the nature of the merchandise, or the risk to the revenue warrants it. Factors CBP weighs include the importer's prior record of late payments or liquidated damages, the volatility of the duty rate on the product, whether the goods are subject to AD/CVD orders, and whether the importer has a history of entry errors. An importer that has drawn penalties or redelivery claims should expect CBP to size its bond conservatively.

Liquidated damages and the surety's reimbursement right

The single biggest misunderstanding about customs bonds is the belief that the surety, not the importer, ultimately pays. The opposite is true. When CBP assesses liquidated damages — for a late ISF, a failure to redeliver merchandise under a CBP demand, a missing document, or a breach of any bond condition — it bills the principal first. If the principal does not pay or obtain mitigation, CBP demands payment from the surety under the bond. The surety pays CBP and then exercises its contractual and common-law right of reimbursement against the importer, often backed by an indemnity agreement the importer signed to obtain the bond. The importer therefore bears the economic loss in the end, plus the surety's costs. This is why a bonded importer must treat every CBP demand for liquidated damages as a live financial exposure and file a timely petition for relief rather than ignoring it.

Replacing, terminating, and the rider process

A continuous bond is not permanent, and understanding how it is changed avoids coverage gaps. When CBP requires a larger bond after an insufficiency determination, the importer places a new bond, and the old one is terminated on a going-forward basis. Termination does not erase liability that already accrued: the terminated bond still answers for entries filed while it was in force, and the new bond covers entries filed afterward. That continuity is why an importer cannot escape an open liquidated-damages exposure simply by switching sureties. Under 19 C.F.R. § 113.27, a surety or principal may terminate a continuous bond on notice, but the termination is effective only prospectively, and the principal must have replacement security in place before the old bond lapses or new entries will be unbonded.

Riders are the mechanism for lesser changes — adding a trade name, changing an address, or adjusting coverage — without rewriting the whole bond. An importer that reorganizes, changes its corporate form, or acquires a new importing entity should confirm that the bond on file still names the correct importer of record, because a bond in the wrong name is as good as no bond for the new entity. CBP's Automated Commercial Environment (ACE) ties the bond to the importer's identification number, and a mismatch there is a common cause of release delays at the Los Angeles and Long Beach terminals.

Who signs, and the personal exposure behind the bond

The principal on a customs bond is the importer of record, but the indemnity agreement that the surety requires often reaches further. Closely held importers frequently sign personal indemnity, meaning that an owner or officer who guaranteed the bond can be pursued personally when the surety pays a CBP claim and seeks reimbursement. The bond's penal amount caps the surety's exposure to CBP, but the indemnity agreement between the surety and its principal is a separate contract that can reach the indemnitor's own assets for the full amount the surety pays plus costs. Before signing, an importer should understand both documents — the bond that runs to CBP under 19 U.S.C. § 1623, and the indemnity agreement that runs to the surety — because the second one is where the personal risk lives.

Choosing between the two bonds

The decision usually turns on frequency and exposure:

Occasional or one-time importer: a single-entry bond sized to the shipment is normally the right tool, and there is no reason to carry a continuous bond for a single transaction.
Regular importer: a continuous bond is almost always cheaper per entry, clears goods at any port, and secures ISF obligations. The break-even point is low — often a handful of entries per year.
AD/CVD or PGA-regulated importer: the aggressive single-entry sizing for these goods makes the continuous bond attractive even sooner, but the importer must watch for insufficiency as duty exposure climbs.

Other bond activity types importers encounter

The Activity Code 1 importer bond is the most common, but the same regulatory framework produces several specialized bonds a California business may need. A custodian of bonded merchandise — a bonded warehouse, a container freight station, or a cartman moving goods between the terminal and a warehouse — posts an Activity Code 2 bond. An international carrier posts an Activity Code 3 bond. A foreign-trade-zone operator posts an Activity Code 4 bond. Each secures a different set of obligations, and an importer that also warehouses or moves its own bonded cargo may need more than one. The sizing and conditions for these bonds are set under the same Part 113 regulations, and the principal's reimbursement exposure is the same: the surety that pays a claim will look to the principal to make it whole.

A closely related point is that the continuous importer bond does not cover penalties for fraud under 19 U.S.C. § 1592 in the way it covers ordinary duties and liquidated damages. Section 1592 penalties for fraud, gross negligence, or negligence are assessed against the importer directly, and while a bond secures the revenue loss, the penalty exposure can far exceed the bond's penal amount. An importer facing a § 1592 penalty should treat it as a liability that the bond will not fully absorb, which is another reason to keep entry accuracy high rather than relying on the bond as a backstop.

Practical compliance steps for a California importer

Confirm who is named as the importer of record and principal on the bond, because that party carries the reimbursement exposure.
Reconcile the continuous bond amount against the prior twelve months of duties, taxes, and fees at least quarterly, not only at renewal.
Build in headroom when Section 301, Section 232, or AD/CVD exposure is rising, so a mid-year insufficiency notice does not catch the supply chain by surprise.
Read every liquidated-damages demand and ISF liquidated-damages claim as a real exposure, and file a timely petition for relief under the applicable mitigation guidelines.
Keep the indemnity agreement with the surety on file and understand its scope before signing.

Frequently asked questions

Is a customs bond required for every import?

A bond is required for essentially all commercial importations, because CBP requires security for the duties, taxes, and fees an entry owes. Some non-commercial or informal entries below the formal-entry threshold may be handled without a continuous bond, but commercial shipments are bonded.

What is the minimum continuous bond amount?

The minimum continuous importer bond is $50,000. Even an importer whose 10 percent formula figure would be lower must carry at least that amount.

How is the 10 percent formula applied?

CBP multiplies the duties, taxes, and fees the importer paid in the most recent twelve months by 10 percent, rounds the result up to the next $10,000 (or $100,000 for figures of $1 million or more), and applies the $50,000 floor.

Why is a single-entry bond for FDA or EPA goods so large?

For Partner Government Agency merchandise, CBP generally sizes the single-entry bond at three times the entered value, reflecting the cost and risk of redelivery, re-export, or destruction if the goods fail the other agency's requirements.

What happens if CBP says my bond is insufficient?

CBP gives a short window to place a larger bond. If the importer does not, new entries can be treated as unbonded, and merchandise will not be released until adequate security is posted.

Does a continuous bond cover Importer Security Filing obligations?

Yes. A continuous bond secures ISF obligations for ocean cargo, which a basic single-entry import bond generally does not, so ISF-only or ISF-plus bonds exist for importers who need that coverage without a full continuous import bond.

If the surety pays CBP, do I still owe the money?

Yes. The surety that pays a CBP claim has a right of reimbursement against the importer, usually backed by a signed indemnity agreement, so the importer bears the economic loss in the end.

Can CBP require a bigger bond than the formula shows?

Yes. Under 19 C.F.R. § 113.13(d), CBP may require a larger bond based on the importer's compliance history, the nature of the merchandise, and the risk to the revenue.

Related guides

For related reading, see our overview of international trade and customs law, and our guides on customs penalties and compliance strategy for California importers. If an entry has drawn a liquidated-damages demand or a penalty notice, read those alongside this bond guide so you understand both the security and the liability side of the same transaction.

Speak with a California customs attorney

If CBP has issued a bond insufficiency notice, assessed liquidated damages, or questioned the adequacy of your security, Trembach Law Firm can help you evaluate the right bond structure and respond on time. Call (213) 645-2246 to discuss your situation. Anatolii Trembach holds an LL.M. and is admitted to the California Bar.

This article is general legal information and not legal advice. Customs bond sizing depends on your specific entries and compliance history, and CBP's determination governs. Consult a qualified attorney about your particular circumstances.

Contact Trembach Law Firm at (818) 514-7680 for a confidential consultation.

Trembach Law Firm | 27001 Agoura Road, Suite 350, Calabasas, CA 91301