Tuesday, January 27, 2026, at the U.S. Supreme Court in Washington, DC.
Al Drago | Bloomberg | Getty Images
If the Supreme Court rules that President Donald Trump’s International Emergency Economic Powers Act (IEEPA) tariffs are illegal, U.S. companies would not only receive tariff refunds, but also billions of dollars paid to insurance companies in bonds and collateral. Customs bonds, also known as surety bonds, provide coverage to importers to ensure payment of duties and taxes levied on imported goods. The value of these bonds and related collateral has soared as the Trump administration increases tariffs.
Importers purchase these bonds through specialized insurance companies called surety companies. These bonds are issued approximately 30 days before the imported goods arrive in the United States and are required by U.S. Customs and Border Protection on all trade entering the United States to ensure that Customs can collect the necessary duties if the importer does not pay the duty. The bond will be held by Customs in an interest-free account for 314 days. During this period, the obligations paid can be reviewed and received final government approval.
U.S. importers pay premiums to insurance companies for their bonds, typically calculated as 1% of the bond limit, and these bonds have become more expensive as tariffs have increased. The price of the customs deposit covers 10% of the duties and taxes payable over a 12-month period, so if customs duties and taxes increase, the customs deposit will increase as well.
“With tariffs increasing from 10% to 25% or more on some products, importers now face bond amounts ranging from the regulatory minimum bond of $50,000 to $450 million,” said Vincent Moy, international surety leader at Marsh Risk. “We’ve seen bond increases of over 200% to date. In one unusual case, a large auto manufacturing client saw custom bond values increase by 550%,” he said.
Insurers also make more money by collecting premiums, said Mayer Shields, managing director of property and casualty insurance at KBW. Customs bonds can be purchased as either a single import bond for one shipment or a continuous bond that covers the entire year if the shipper imports multiple shipments in a year.
Moi said that in some cases, companies are not receiving “sufficient notification” from customs due to changes in tariff rates and increased prices of imported goods.
Jennifer Diaz, a certified international attorney at Diaz Trade Law, said the number of bond deficiency notices issued has quadrupled since 2017, and the pace has accelerated recently due to the volatile customs environment. In 2019, there was a sharp increase in deficiency notices due to tariffs related to Section 301 of the Trade Act of 1974.
In the January-July 2025 period, the most recent period for which U.S. Customs data is available, the bond shortfall was nearly $1.5 billion. The total public debt shortfall in 2024 was $545.7 million. The national number of underbond cases issued by U.S. Customs increased nearly 526 percent, according to November estimates from global shipping company Western Overseas Corporation.
Trade lawyers have argued to CNBC that importers should be required to notify them that their bonds are about to expire, as the balance on existing bonds may be running low.
“We don’t want imports to remain stuck at the port because bonds cannot cover customs duties,” Diaz said. “Importers should consult their guarantors and customs brokers and ask them to notify them when the bond is approximately 75% saturated. It typically takes about 10 days for a new bond to be issued. As such, they do not want their imports to remain at the port and be charged demurrage or demurrage fees.”
Diaz said 50% of the deficiency notices are for bonds under $100,000.
Collateral as a fee payment guarantee
These increased bond limits have forced some companies to issue collateral in addition to bonds to guarantee payment of customs duties. “If companies do not increase collateral, goods will be held up at the port,” Moi said.
Collateral is held by the insurance company issuing the bond for the 314-day period established by U.S. Customs for bond bond processing.
“Tariffs are much higher than they’ve ever been,” said John Shepherd, executive vice president of insurance brokerage at Shea & Company, who specializes in arranging, managing and processing U.S. customs bonds. “This underwriting process is a complex process that involves credit evaluation and tests the quality of the importer’s ability to deal with customs. If the guarantor determines that it is unlikely that the principal will honor its obligations under the bond, that is when issues such as collateral and additional guarantees become an issue.”
Insurance experts told CNBC that while there is sufficient insurance supply to meet this demand, activity in the market is causing disruption to get deals done. “The uncertain tariff environment is impacting importers of capital goods, luxury brands and household goods,” Moi said. “These companies are working with surety bond brokers to find surety insurers with the financial strength to support multi-million dollar bond limits.”
Surety insurers are developing new risk modeling tools to determine the terms and prices of larger, more unpredictable liabilities. As a result, many importers pay significantly higher premiums to maintain customs bonds, which come with stricter credit conditions. “While well-capitalized importers are eligible for larger customs deposits, importers with weaker balance sheets may have to post additional collateral with surety companies, which could strain their liquidity position,” Moi said.
But trade experts also told CNBC that the situation for importers is complicated by the fact that it is difficult to predict import duties over a 12-month period as tariff rates change rapidly. Shortages, surprise collateral demands, and disputed bond contract adjustments have become the norm rather than the exception for many.
Insurance companies reap short-term benefits from President Trump’s trade war
Analysts told CNBC that the increase in import values has boosted demand for insurance companies such as: RLI, CNA, skyward, Chub, Liberty Mutual, Palomar Specialty Insurance.
“Increased tariff bond claims offset the slowdown in renewable energy, and both trends are driven by government policy,” RLI Chief Operating Officer Jen Klobnak said on the insurer’s fourth-quarter conference call earlier this month.
But if the Supreme Court rules that IEEPA tariffs are illegal, that would be bad news for insurance companies but good news for companies seeking refunds.
“Once the duties are refunded, the amount of the deposit associated with those imported goods will be allowed to be reduced to a level sufficient to cover the duties, taxes and fees,” Moi said. “Companies must apply to the insurance company that issued the bond to reduce the amount of the bond and collateral.”
“If the tariffs are determined to be illegal and there is a refund, that would be a headwind for revenue,” Shields said. “While auditing is a significant effort for insurance companies, the reconciliation process is not new to insurance companies. However, the size of transactions is increasing,” he said. But Shields added that even if insurers have to return bond funds, in the big picture “the positives of freer trade and less uncertainty win the day. Transparency has more positives than negatives.”
Another uncertainty is the possibility that the Trump administration will enact new tariffs to replace existing IEEPA tariffs if the Supreme Court rules these tariffs illegal. The Trump administration has promised that there will be other legal tools to quickly enact tariffs that will effectively replace the IEEPA tariffs and have similar policy effects.
David Craven, a lawyer for Diaz Trade, said the threat of a new exchange tariff and the existing debt facing surety companies suggested the refunds would not be immediate. “The increased liability and the fact that Customs is now requiring collateral from sureties… operations are at risk and it stands to reason that sureties won’t be caught holding the bag,” Craven said.
The Supreme Court did not issue a highly anticipated ruling on President Trump’s IEEPA tariffs before it began a month-long recess earlier this month. This means that the earliest date an opinion could be issued is now February 20th.
Moi warned that if the courts rule against Trump, businesses should be prepared for some delays in receiving these funds due to insurance paperwork requirements. Insurers must verify and audit paper trails before issuing collateral.
“Some surety companies have a collateral return review process that can take 30 to 60 days to return to underwriting for review, which is typical,” Diaz said. He added that many small and medium-sized businesses will now have to seek repayment from their guarantors, so a process will begin to review this. “If you’re expecting the collateral to be returned over time, the squeaky wheel might get it back a little faster,” she says.
