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Surety Bond Coverage Changes

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Increased Duties in 2018
This year has been a year of unpredictable changes in the trade industry:

  • Section 232:  The Presidential Proclamation initiating Section 232 duties on steel and aluminum imports, at 25-percent and 10-percent respectively, was the beginning of these hefty duties that impacted importers.
  • Section 301: The President then invoked Section 301  and placed duties of 25-percent on some Chinese goods and 10-percent on others.
    • The 10-percent duties will likely increase to 25% in 2019 although that day of reckoning appears to have been delayed until March 1st for the moment.

This turbulence has made it a difficult year for many importers, particularly those challenged with imports subject to new and very large duties.

In all the excitement surrounding these changes to trade, it appears that another key area of concern is now cropping up.  The continuous Customs bonds that importers purchase to cover their importations, as required by Customs regulations, are suddenly being found to be insufficient as these new duties are sending duty liabilities for importers rocketing skyward.

Updates to Surety Bond Coverage

For importers working with their Customs brokers on their continuous bonds, the surety companies are alerting the brokers to potential insufficiencies based on current import numbers and trends.  In many cases, the brokers can then try to work with the importers before Customs and Border Protection (CBP) issues any bond insufficiency notifications.

Where importers have already exceeded 90-percent of their current bond’s coverage, CBP is sending out bond insufficiency notices, demanding that current bonds be terminated and replaced by larger bonds in a very short period of time.  This is placing pressure on importers as they must pay additional premiums resulting from higher coverage amounts.

As if all of this wasn’t difficult enough, the new bond amounts may exceed certain underwriting guidelines and require that importers provide full financials to the surety for underwriting approval. 

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Some importers may even find that the underwriters feel that these financials indicate a need for the surety to require posting of collateral by the importer.  Collateral demands may be for any amount, up to the total amount of the bond.  This can really crunch an importer’s cash flow or credit line.

We Can Help

Being aware of your bond coverage amounts and duty outlays is more important than ever.  You should be monitoring ACE Portal reports monthly or weekly and working with your broker to understand and anticipate your current and future continuous bond needs.  Contact Mohawk for help in setting up your ACE Portal account and training on how to use it, especially to run reports.  We can also show you how we work with surety companies to ensure you have the proper level of coverage to avoid any supply chain disruptions.


Mohawk Achieves Great Place to Work Certification for Fifth Straight Year

gptw BUILDSyracuse, New York – December 17, 2018 – Mohawk Global Logistics Corp announced today that it has been recertified as a Great Place to Work®. Mohawk achieved this rating for each of the last five years.

“We are honored to have achieved this national rating for the fifth consecutive year. We are also pleased that this year’s survey saw a 94 percent participation rate and an overall score of 92 percent. These results are a true testament of our engaged, family-like culture that is rooted in our Core Values of Care. Deliver. Enrich.,” said Gar Grannell, President and Chief Executive Officer of Mohawk. “We are a family here at Mohawk and we show it every day by supporting one another one-hundred percent and reinforcing our core values in everything we do. We care for each other personally, deliver world-class, personalized solutions to clients, and enrich each other’s lives purposefully – personally and professionally. These values are part of our DNA and are woven into the fabric of Mohawk,” he added.

The results are based on 146 employee surveys. According to the study, 99 percent of Mohawk Global employees feel good about contributing to their community. Mohawk employees cited a number of programs and benefits that make the Company a unique work environment. The accreditation and certification opportunities, mentorship program and latest MGL University curriculum were listed among the top perks for employees.

“MGL University is Mohawk’s very own in-house orientation program, educating our employees on our company culture, departments, and skills necessary for success,” said Alexa Blasi, Training & Development Specialist of Mohawk. “We enrich purposefully. We know business thrives through the development and empowerment of each person’s potential in a fast-paced, fun-loving culture.”

To learn more about Mohawk and their survey results click here.

About Great Place to Work®

 Great Place to Work® is the global authority on high-trust, high-performance workplace cultures. Through proprietary assessment tools, advisory services, and certification programs, including Best Workplaces lists and workplace reviews, Great Place to Work provides the benchmarks, framework, and expertise needed to create, sustain, and recognize outstanding workplace cultures. In the United States, Great Place to Work produces the annual Fortune “100 Best Companies to Work For®” list and a series of Great Place to Work Best Workplaces lists including lists for Millennials, Women, Diversity, Small and Medium Companies and over a half dozen different industry lists.


Trade News Update: USMCA & Section 301 Duties


12/4 UPDATE: The White House has confirmed the 90-day suspension of the increase on Section 301 duties began December 1. The scheduled increase deadline is now March 1, 2019.

This has been a busy weekend for trade news. The two major issues that have provoked the most interest are:

1- The signing of the USMCA as a first step toward replacing NAFTA

2- The temporary suspension of the January 1st duty increase from 10% to 25% on the third tranche of goods subject to Section 301 duties


President Trump, Prime Minister Trudeau of Canada, and outgoing President Nieto of Mexico all signed the new US, Mexico, Canada Trade Agreement (USMCA) at the G20 summit in Buenos Aires, Argentina just before incoming Mexican President, Andres Manuel Lopez Obrador (known as AMLO) took office. What does this mean? The U.S. Congress will still need to ratify the new agreement. There are concerns that this may prove to be an obstacle to swift implementation of USMCA. While President Trump would like to terminate NAFTA and substitute USMCA, there are significant obstacles including the fact that only Congress has the authority to withdraw the US from NAFTA and several congressional representatives have expressed concerns about the new agreement not going far enough to protect US interests.

There are concerns over the lack of lifting Section 232 steel and aluminum tariffs, as desired by Mexico and Canada, and there has been talk of quotas on steel and aluminum by the U.S. to allow duty free importations from Mexica and Canada in limited quantities.

China Section 301 Duty Update

In a major announcement this weekend, President Trump announced the suspension of the increase in duties on Chinese goods listed in the third tranche expected on January 1st, 2019. This means that goods that were scheduled to see an increase in Section 301 duties from 10% to 25% on January 1st will now remain at 10% while Presidents Trump and Xi Jinping continue to negotiate on forced technology transfer, intellectual property rights protections, and other issues.

This announcement should provide relief for many companies whose reliance on Chinese components and finished goods for their continued success and support of many jobs domestically would be jeopardized by the duty increase on list 3 from 10% to 25%. If negotiations with the Chinese go well there may even be a rollback of some of the existing Section 301 and 232 measures.

Importers should be aware that this suspension of the increase in duties is temporary and, should China and the U.S. fail to come to terms within the 90 days, the Trump administration has promised that the suspended increase will become effective. This means that importers should hope for the best but be prepared for the possibility that the increase to 25% duties on goods on list 3 may still take place on March 1st, instead of January 1st.

By Robert Stein

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