Impact of Supreme Court Ruling on Customs Bonds and Insurance Refunds

If the Supreme Court ultimately finds the tariffs enacted under the International Emergency Economic Powers Act (IEEPA) to be unlawful, U.S. businesses could anticipate not only reimbursements for tariffs paid but also substantial refunds on payments made to insurance carriers for customs bonds and collateral. Customs bonds, or surety bonds, are utilized by importers to ensure the payment of duties and taxes on imported merchandise. The introduction of these tariffs has significantly increased the value of these bonds and related collateral.

Importers must secure these bonds before their goods enter the U.S., as mandated by Customs and Border Protection. This requirement ensures duties are collected even if the importer defaults. Typically, specialized insurers, known as surety companies, issue these bonds about 30 days before goods arrive. The bonds remain active for 314 days, during which customs can review the duties paid. Importers pay a bond premium, generally pegged at 1% of the bond limit, which has increased alongside the tariffs.

Impact of Rising Tariffs on Bonds

Vincent Moy, an international surety leader at Marsh Risk, highlighted the financial burden on importers, noting significant bond amount escalations. Some bonds have increased more than fivefold due to tariffs climbing from 10% to rates potentially exceeding 25% on certain goods. Insurance companies have leveraged these circumstances, with Meyer Shields of KBW pointing out the revenue gains from higher premium collections.

Jennifer Diaz from Diaz Trade Law observes an uptick in "insufficient notices" issued to companies, correlated with tariff volatility. Reports indicate that bond insufficiencies have surged, reaching $1.5 billion in a recent 2025 assessment. Surety experts stress the importance of proactive bond management by importers to avoid shipment delays, which could lead to costly detention fees.

Collateral and Risk Management Challenges

The increase in bond requirements has also compelled companies to provide additional collateral. Moy notes that without collateral, goods risk being held at ports, causing operational disruptions. These collateral arrangements are managed by the issuing insurance companies for the same 314-day period required for bond guarantees.

The fluctuating tariff environment has triggered a spike in demand for surety bonds, necessitating more rigorous risk management strategies by insurers. This has led to tighter credit terms and escalated premiums. Moy emphasizes that financially robust importers are more likely to secure higher bonding limits. Should the Supreme Court rule against the IEEPA tariffs, companies will likely experience a refund process requiring meticulous documentation verification by insurers.

Future Considerations for the Insurance Industry

Shields from KBW remarked that although refunds would pose initial challenges for insurers due to necessary audits, the situation could lead to benefits like increased trade clarity in the long run. The industry also contemplates potential new tariffs that could replace the IEEPA tariffs if deemed illegal. This uncertainty poses additional challenges for surety companies, as pointed out by David Craven, legal counsel at Diaz Trade, highlighting the need for careful risk assessment and management.

While awaiting a Supreme Court decision, businesses are advised to prepare for likely procedural delays in retrieving refundable amounts from insurers. As Diaz suggests, businesses should proactively engage with their insurers to expedite the return process once any legal resolution is achieved.