Anti-dumping is the highest risk category to a surety on the customs bonds they underwrite. In 2018 anti-dumping was the leading cause of loss on import bonds. Anti-Dumping Duties, or ADD as it’s commonly referred to, is a tariff imposed on imports manufactured in other countries that are priced below Fair Market Value on similar goods made in the USA. When the government believes imported goods are being “dumped” into the market through low pricing, anti-dumping duties are levied to protect local businesses from unfair competition by foreign imports.
There are many reasons why ADD is a higher risk to the surety. The duties levied against the importer can reach between 7-230% depending on product and the country of origin. The duties are also applied retroactively. At the time of entry, a cash deposit of estimated duties is made. A final amount will be determined after Commerce’s ITA Enforcement and Compliance calculates the final rates. The CBP will issue a bill for any additional duty plus interest. If a company cannot pay, the surety will be responsible to pay the CBP on their behalf.
Importing goods subject to Anti-dumping can increase the difficulty of securing a Customs Bond. Financial statements, collateral or other forms of financial backing may be required by the surety before a bond is issued. In addition, the premium on the bond can be up to double the amount of a bond that is not subject to ADD.
The International Trade Administration lists information on various commodities which have applicable ADD. Common items are steel, household supplies (tissue paper and plastic bags) and wooden furniture, to name a few. An easy method for an importer to avoid the risk of ADD is to know their product. Duties and penalties of anti-dumping are assigned to make those goods less viable in the US market. Find a different source for your products, if possible.