CBP Continuous Bond Insufficiency: How the 10% Rule Works and What to Do When the Notice Arrives

CBP issued 27,479 continuous bond insufficiency notices in fiscal year 2025, with a combined shortfall of nearly $3.6 billion. That's more than double the volume from 2019, when the first round of Section 301 tariffs drove the last major wave of bond adjustments. The structural cause is the same both times: duty totals went up, bond amounts didn't.

With IEEPA reciprocal tariffs, Section 301, Section 232 metals duties, and antidumping and countervailing duty cash deposits stacking on top of each other through 2025 and 2026, many importers are running continuous bonds that were sized for a pre-tariff duty environment. The 10% formula that determines the required bond amount doesn't know or care that tariff policy changed. It recalculates every month, automatically.

The Bond Amount Formula

The required continuous bond amount is 10% of total duties, taxes, and fees paid in the preceding 12 months, rounded to the nearest $10,000, with a floor of $50,000. This comes from CBP Directive 3510-004 on monetary guidelines for setting bond amounts, which CBP published publicly in 2024 as a plain-language guide.

"Duties, taxes, and fees" is read broadly. The base HTS duty rate is the starting point, but Section 232, Section 301, and IEEPA tariff payments all count. So do AD/CVD cash deposits, merchandise processing fees (MPF), and harbor maintenance fees (HMF). Every dollar of duty stacking adds to the figure the 10% is calculated against.

The math is straightforward. An importer paid $800,000 in total duties in 2023, before most of the current tariff environment was in place. Their continuous bond was set at $80,000. By mid-2025, after IEEPA added 10% across the board and Section 301 added 25% on their Chinese-origin goods, their trailing 12-month duty total reached $1.9 million. Required bond: $190,000. Their $80,000 bond covers 42% of the requirement. ACE generates an insufficiency notice at the next monthly review.

The Monthly Review Cycle

ACE reviews all active continuous bonds every month. It pulls each importer's trailing 12-month duty total from liquidated entry data, applies the 10% formula, and compares the result to the bond's face value. When the calculation exceeds the face value, the bond is flagged and the notice goes out. There's no warning beforehand, no sliding scale, no grace period. You're either sufficient or you're not.

This creates a practical timing issue. Your duty payments can be elevated for months before ACE catches up, because the review uses liquidated entries, not filed entries. A standard entry liquidates 314 days after filing unless CBP extends the liquidation period. Entries with AD/CVD orders often sit unliquidated for much longer, sometimes years. So if you've been importing at elevated tariff rates for eight months but most of those entries haven't liquidated yet, your trailing-12-month total still reflects the older, lower-duty entries. Looks fine. Then they start liquidating in batches and your calculated requirement jumps.

Bond insufficiency notices often arrive in clusters for exactly this reason. The lag is predictable. If you're paying substantially more in duties now than you were 12 months ago, model what will liquidate over the next two quarters, not just what's already been assessed.

What the Notice Says and Who Gets It

Under 19 CFR § 113.13(c), when CBP determines a bond is inadequate, both the principal (the importer) and the surety (the bonding company) receive written notification. The principal has 15 days from the date of notification to remedy the deficiency.

That 15-day period was shortened from 30 days in CBP's 2015 bond program final rule. CBP's reasoning at the time was that 30 days was too long to protect revenue given ACE's capacity to identify shortfalls quickly. Fifteen days is not a generous window when you need your surety to prepare, sign, and file a rider with CBP.

The notice will state the calculated deficiency: your required bond amount, your current bond amount, and how far short you are. Remedying it means either a bond rider or a new bond. "Remedy" under the regulation means one of those two things. Sending a letter explaining why your bond should be considered sufficient is not remedy.

Two Ways to Fix It

Bond rider. A rider is an amendment to the existing continuous bond that increases its face value. Your surety prepares the rider on CBP-prescribed forms and files it electronically with CBP. For accounts in good standing, most sureties can turn a rider around within one to three business days. It takes effect immediately once CBP processes it. This is the right first call.

New continuous bond. If your surety won't or can't file a rider (because they've tightened underwriting on your account, or because the required increase exceeds their appetite), you'll need a new bond from a different company. The new bond becomes effective when CBP processes it. The old bond doesn't get cancelled; it stays active until its anniversary date. During the overlap period both bonds are available for entries. You use the new, larger bond for anything requiring the higher face value.

Single-entry bonds, one per shipment and sized at 100% of that entry's total duties and fees, are the emergency option when you need freight to move before either path closes. They're expensive and operationally tedious, but they keep cargo from sitting at the port.

What Happens If You Miss the Deadline

CBP can refuse to accept entries when the continuous bond is flagged as insufficient. In practice, port directors hold shipments pending either a resolved bond or single-entry coverage for each shipment. The flagged bond can still technically be presented, but CBP has discretion to deny entries on it.

Your surety also acts independently. Bonding companies track insufficiency notices and many will pull back underwriting on accounts that don't respond — which is exactly the wrong time to discover you can't get a larger bond. Some sureties require cash collateral from importers who have unresolved notices.

The surety's liability is real. If duties come due and the importer can't pay, the surety pays and then tries to recover from the importer. Insurers that see an insufficiency notice and no response read it as elevated default risk. Getting ahead of the notice rather than scrambling after it is the practical play.

Calculating Your Requirement Before CBP Does

Pull your customs duty payments for the last 12 months. Your broker can generate a duty summary from their records; you can also pull it from ACE directly if you have access. Add up every duty, tax, and fee on liquidated entries: base duties, Section 301, IEEPA, Section 232, AD/CVD deposits, MPF, HMF.

Multiply by 10%. Round up to the nearest $10,000. That's your required bond amount. The floor is $50,000 regardless of what the calculation produces.

If the result exceeds your current bond face value, call your surety today. Initiating the rider voluntarily gives you control over the timeline. You avoid the 15-day clock, and you avoid the surety tightening its posture because CBP flagged the account first.

Do this as a quarterly habit in the current tariff environment. The calculation that was fine in January may be insufficient by April. Annual bond renewals are not frequent enough when duty rates are changing by executive order.

The Stacking Problem in Practice

The scale of the tariff stacking that's driving insufficiency notices is worth making concrete. Consider an importer of industrial goods from China:

Base HTS duty rate: 5%
Section 301 List 3: 25%
IEEPA country tariff: 145% (pre-pause rate for China) or the currently applicable rate
Effective combined rate: 175%+

A product that cost $100,000 in customs value now generates $175,000+ in duty. On $10M in annual customs value, that's $17.5M in duties. Required continuous bond: $1.75M. An importer who had a $1M bond set to cover 5% duties on the same volume was carrying $500,000 in protection. They need to triple it.

Even at the reduced IEEPA pause rate for China, the stacking is substantial. Importers who source from multiple countries face different rate combinations for each. Bond sizing should reflect the actual weighted average of what you're paying, not the base rate on your primary HTS code.

A Note on Importer-Level vs. Broker-Filed Bonds

Continuous bonds are held at the importer of record (IOR) level, not at the broker level. Your broker files entries on your behalf, but the bond is yours. If you change brokers, the bond follows the IOR number, not the broker account. This matters for companies that consolidate importations under a single IOR number across multiple divisions or subsidiaries: all duty payments flow into the same trailing-12-month total, and the required bond has to cover all of it.

Conversely, importers who split their import programs across multiple IOR numbers — different legal entities for different product lines — have separate bond sufficiency calculations for each. That structure can be genuinely useful for managing bond exposure if the split is operationally defensible. But it can't be an IOR number created solely to reduce a bond calculation; CBP looks at the underlying business relationship between entities and the goods being imported.

Key Takeaways

The required continuous bond amount is 10% of total duties, taxes, and fees paid in the preceding 12 months, rounded to the nearest $10,000, with a $50,000 minimum. This is the formula from CBP Directive 3510-004.
ACE runs this calculation monthly against all active bonds. There's no advance warning — you get the insufficiency notice when you're already past the threshold.
The notice goes to both the principal and the surety under 19 CFR § 113.13(c). You have 15 days to remedy it with a bond rider or new bond.
Missing the deadline exposes you to entry refusals at the port and tighter underwriting from your surety at the moment you need more capacity.
A bond rider is the fastest fix — most sureties handle it in one to three business days for accounts in good standing. A new bond is the backup; both stay active during the overlap period.
CBP issued 27,479 insufficiency notices in FY2025 with a combined shortfall of $3.6 billion, more than double the 2019 peak. The driver is tariff stacking: IEEPA, Section 301, Section 232, and AD/CVD deposits have sharply increased effective duty rates without corresponding bond increases.
Calculate your requirement quarterly: 12-month duty total × 10%, rounded up. If your current bond falls short, call your surety before the monthly ACE review catches it.
Watch for the liquidation lag. Elevated duties from recent months may not have liquidated yet. When they do, they spike your trailing total and trigger a notice that looks sudden but was predictable.

Before you can size your bond correctly, you need the complete duty stack for each product line: base rate, Section 301, IEEPA, Section 232, and AD/CVD. The HTS code lookup and landed cost calculator give you the full picture for any HTS code and country of origin. Run your first classification free.