U.S. Tariff Rate Quotas and How To Take Advantage of Them

Ropes tied to a dock and and a cargo container ship
U.S. tariff rate quotas can be difficult for importers to understand. Fortunately, we’ll show you how they work and how they’ll benefit you during the importing process.
January 12, 2023
Last Modified: February 27, 2024
Share This Article
copy-link-to-clipboard Copy URL to Clipboard

U.S. tariff rate quotas are important to look out for when it comes to importing. This specific type of quota can help importers by making it cheaper to import certain goods in small quantities. However, tariff rate quotas have a few catches that importers must understand before using them. 

According to Customs and Border Protection (CBP), tariff rate quotas (TRQ) allow for the importation of a specific quantity of goods at a reduced rate. Importers can still import goods in a quantity larger than specified by the tariff rate. However, the importer will have to pay a duty rate that’s much higher than the TRQ. 

This guide will help you to understand U.S. tariff rate quotas better when you’re importing goods from overseas. 

A U.S. tariff rate quota stamp

How Does A U.S. Tariff Rate Quota Work?

TRQs are a type of quota that the CBP assigns to certain types of imports. These quotas make importing the goods assigned to them much more cost-effective for importers. The catch is that the rates these quotas provide are only applicable if the importer doesn’t bring in a quantity of goods greater than what it specifies. 

Importers that don’t take possession of goods that are subject to a TRQ and choose not to pay the higher duty rate can have their goods moved to a bonded warehouse or foreign trade zone. An importer can keep their goods at these locations until the start of the next quota period. 

What Is the Purpose Of U.S. Tariff Rate Quotas?

The primary purpose of tariff quotas is to reach a compromise between these three parties:

  • U.S. importers
  • U.S. domestic production
  • Foreign countries the U.S. conducts international trade with

Tariff quotas achieve this by granting U.S. importers market access to products in foreign countries. This also helps exporters in foreign countries by allowing them to sell their goods to U.S. buyers. At the same time, TRQs protect the domestic production of certain U.S. goods. 

They do this by setting a limit on how much of certain goods U.S. importers are allowed to bring into the country at a preferential rate. If importers bring in more than the limit provided by the TRQ, they’ll be forced to pay a much higher rate. 

Since the higher rate is so much greater, importers are discouraged from bringing in goods in quantities larger than the TRQ specifies. This allows the U.S. to control how much of a certain type of product gets imported. By doing so, domestic producers of the same type of product are still able to compete. 

Look into our article on tariffs, duties and more to have a better understanding of the various taxes on imported goods. 

Fruits and vegetables on plates and bowls on a table

What Does the U.S. Have Import Quotas On?

The U.S. has numerous TRQs levied against various products, most of them being agricultural. 

TRQs are outlined in four different places:

  • Free trade agreements (FTAs)
  • Regular trade agreements
  • The General Agreement on Tariffs and Trade (GATT)
  • The HTSUS

In the HTSUS, importers will find goods to that TRQs are applied. Goods in the HTSUS that have TRQs include the following: 

  • Brooms (9603)
  • Whiskbrooms (9603.10.05)
  • Other brooms (9603.10.40)
  • Ethyl alcohol (9901.20.20)
  • Milk and Cream (0404.20.20
  • Olives (Chapter 20 of the Harmonized Tariff Schedule of the U.S.[HTSUS]) 
  • Satsumas (mandarins) (2008.30.42)
  • Tuna (1604.14.22) 
  • Upland cotton (9903.52)

Next, we’ll discuss the TRQs for goods that come from countries the U.S. has FTAs with. Below we’ve listed the FTAs that the U.S. shares with other countries. Many of the TRQs included in these FTAs and regular trade agreements are assigned to agricultural products.

They include:

  • U.S. Australia FTA
  • U.S. Bahrain FTA
  • U.S.  Central America-Dominican Republic FTA
  • U.S. Chile FTA
  • U.S. Morocco FTA
  • U.S. Oman FTA
  • U.S. Peru Trade Promotion Agreement
  • U.S. Panama FTA
  • U.S. Colombia Trade Promotion Agreement
  • U.S. Korea FTA 

In addition to FTAs that levy U.S. tariff rate quotas, there are also regular trade agreements and trade legislation that the U.S. has with other countries. We’ve listed U.S. trade agreements that have TRQs.

They include:

  • U.S. Peru Trade Promotion Agreement
  • U.S. Colombia Trade Promotion Agreement
  • U.S. Israel Agreement on Trade in Agricultural Products

Lastly, the U.S. General Agreement on Tariffs and Trade (GATT) has set TRQs for a variety of different products. Like with the FTAs and regular trade agreements, most of the TRQs in the GATT are applied to agricultural goods.TRQs are especially relevant due to how many agricultural products the U.S. imports every year. 

Studies show that the value of U.S. agricultural imports in the past five years has been steadily rising, so it still represents a good market to invest in.. 

Total Value of US Agricultural Imports the Past Five Years (2018-2022)

YearTotal Value In USD
2018136.5 Billion
2019141.4 Billion
2020143.4 Billion
2021163.29 Billion
2022165 Billion

Source: Statista 

If you’re importing dairy products into the U.S., look into our article on the topic so you’ll know exactly what to do. 

30 Minute Licensed Expert Consulting Will Personally Guide You
Don’t Overpay on Duty Rates

Our 30 Minute Licensed Expert Consulting Will Personally Guide You.

Contact our Licensed Expert Consultant >

How To Determine If Goods Are Eligible for Tariff Rate Quotas

Remembering every U.S. tariff rate quota there is nearly impossible to do. Fortunately, importers only need to follow a few different steps to determine if the goods they’re importing goods from another country that has a TRQ. 

These steps are:

  1. Determine the HTS and Category Number for the goods
  2. Check applicable FTAs and the Commodity Status Report

Following these two simple steps allow importers to determine if their goods are subject to U.S. tariff rate quotas on their own.

1. Check HTS Code and Category Number

The first way to determine if a product is subject to a TRQ is to check the HTS code of the products being imported. Importers can check their HTS codes for applicable TRQs using a few different methods. 

They include:

  • Contacting a CPB Import Specialist – The CBP has a directory where importers can access the phone number of the CBP office at the port their goods will arrive at.
  • Obtain a ruling from the Office of Regulations and Rulings, National Commodity Specialist Division – Obtaining a ruling provides importers provides up-to-date information on whether an importer’s goods are subject to a TRQ.
  • Searching the HTS code on the Customs Rulings Online Search System (CROSS) – This database contains rulings on HTS codes for various goods.
  • Reviewing the U.S. Harmonized Tariff Schedule – The notes of each HTSUS chapter and the article description will reveal if there is an active TRQ for the product.

The next step to determining if an imported product is subject to a U.S. tariff rate quote is by looking at the category number of the product. Not all imports have category numbers, but the ones that do will have the three-digit number listed in parentheses and placed next to the HTS code.

If you are unsure of your HTS code, check out the HTS Lookup Tool available through USA Customs Clearance

2. Check FTAs and Commodity Status Report

Another way to determine if goods are subject to a TRQ is by checking for an applicable FTA. While the U.S. doesn’t have an FTA with every country, the FTAs the U.S. does have state which goods are subject to a U.S. tariff rate quota. The best part about FTAs is that they largely stay the same once they’re enacted. 

This means that importers don’t have to constantly worry if the information about goods subjected to TRQs will become outdated. Importers will only need to check if the FTA has been reversed or updated. 

If an FTA does subject certain imports to TRQs, then check the Commodity Status Report. This report is released weekly and it has all the most up-to-date information regarding goods that are affected by TRQs. 

For more information about FTAs, check out our article on U.S. free trade agreements.

A view of a port from a high vantage point

What Government Agencies Enforce Import Quotas?

The CBP is the primary agency that administers import quotas, but it’s not the only one. Both the Department of Interior and the Department of Commerce administer import quotas. The quotas apply to the importation of watches and watches that come into the U.S. as insular possessions.

Import quotas are also administered by the Department of Agriculture and they apply to certain dairy products. For importers to apply these tariff rate quotas to their imports, they must obtain the appropriate import license from the Department of Agriculture. 

Dairy products that require licensing include:

  • American type cheese
  • Blue mold cheese
  • Butter and fresh or sour cream
  • Butter substitutes
  • Cheddar cheese
  • Cheese and substitutes for cheese
  • Dried milk
  • Edam and gouda cheese
  • Italian type cheese
  • Swiss or Emmentaler cheese 

The final federal agency that administers import quotas is the Committee for the Implementation of Textile Agreements (CITA). This agency is part of the Department of Commerce and they administer Earned Import Allowance Programs that are designed to benefit certain target countries.

USA Customs Clearance Can Help You Take Advantage Of Tariff Rate Quotas

Understanding the inner workings of U.S. tariff quote rates can be stressful to deal with on your own. Fortunately, the team at USA Customs Clearance is comprised of Licensed Customs Brokers that can provide consulting sessions. In these sessions, you’ll be able to learn everything you need to know about TRQs.

In addition to our consulting services, we also offer the following:

  • Customs Brokerage
  • Customs bonds
  • Importer record of registration
  • Manifest confidentiality 

At USA Customs Clearance, we offer services and products that are useful for both new and experienced importers. Get started below if you’re ready to import with us or give us a call at (855) 912-0406 to find out your next course of action.

Frequently Asked Questions

How can importers effectively monitor their quota usage throughout the quota period to ensure they do not exceed the preferential rate limits?

Importers can monitor their quota usage by regularly checking the quota status reports published by CBP and other relevant government agencies.

These reports provide updated information on quota fill rates and can help importers plan their shipments to avoid exceeding the preferential rate limits. Additionally, utilizing specialized software or services that track quota usage can offer more real-time monitoring and management capabilities.

What are the specific challenges or pitfalls importers face when navigating tariff rate quotas with products subject to fluctuating market demands?

Navigating tariff rate quotas with products subject to fluctuating market demands poses challenges such as predicting quota availability and managing inventory levels to align with quota periods.

Importers must be agile, adjusting their import strategies based on current market conditions and quota availability. This may involve diversifying supply sources or adjusting product offerings to mitigate the impact of market fluctuations on quota utilization.

Can importers apply for an increase in their allocated quota, and if so, what is the process and what criteria must be met?

Importers cannot directly apply for an increase in their allocated quota for tariff rate quotas. The allocation and management of tariff rate quotas are typically determined by trade agreements and government regulations.

However, importers can advocate for changes through industry groups or trade associations that engage with government policymakers. These bodies may lobby for adjustments to quota allocations based on industry needs and market conditions.

Share This Article
copy-link-to-clipboard Copy URL to Clipboard

Leave a Reply

Add your first comment to this post

USA Customs Clearance
315 NE 14th St #4122
Ocala, FL 34470
(855) 912-0406
Copyright AFC International LLC. All Rights Reserved.