September 30, 2019
While brands and retailers are scrambling to figure out how to cover the cost of new tariffs, mulling whether to raise prices or reduce staff when the former is undoubtedly met with resistance, many are overlooking another critical cost: increased customs bonds.
Importers bringing goods into the United States have to prove to U.S. Customs and Border Protection that they can cover the costs of duties, taxes and any other fees associated with an import shipment valued at more than $2,500. The bulk of those bonds are continuous or annual bonds, which must cover 10 percent of all duties paid to Customs for the year.
The problem now is that with new punitive tariffs, the costs for those bonds are increasing—which also means companies’ borrowing power will be decreasing. And in the face of a possible recession, the position could prove unfavorable for many.
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