What is a tariff rate quota?

A tariff rate quota (TRQ) is a two-tier tariff system: imports within a specified quantity face a low or zero duty rate (in-quota), while imports exceeding that quantity face a much higher rate (over-quota). For example, U.S. sugar TRQ rates are ~1.5% in-quota vs. ~65% over-quota.

Which products have tariff rate quotas?

The U.S. maintains TRQs primarily on agricultural products including sugar (raw and refined), dairy (cheese, butter, milk powder), beef and lamb, cotton, tobacco, and peanuts. USMCA also includes specific TRQ provisions for U.S.-Canada-Mexico trade in dairy and other products.

How do you get in-quota tariff rates?

TRQ allocation methods vary by product: first-come first-served (apply earliest), historical allocation (based on past import volumes), license or auction (government assigns import licenses), or country-specific allocation. Contact CBP or your customs broker to determine the allocation method for your product.

Tariff Rate Quota (TRQ) | TariffCenter.AI

A tariff rate quota (TRQ) is a two-tier tariff system where a lower duty rate applies to imports within a specified quantity (the quota), and a higher duty rate applies to imports that exceed that quantity. TRQs are commonly used for agricultural products and are a key mechanism in trade agreements like USMCA.

How TRQs Work

The Two Tiers

Tier	Description	Typical Rate
In-quota	Imports within the quota volume	Low or zero duty
Over-quota	Imports exceeding the quota volume	Significantly higher duty

Example: Sugar

The U.S. maintains a TRQ on raw cane sugar:

In-quota: Up to 1.1 million metric tons at a rate of 0.625 cents/kg (~1.5%)
Over-quota: Anything beyond the quota at 33.87 cents/kg (~65%)

The gap between in-quota and over-quota rates creates enormous economic incentive to secure quota allocation.

TRQs in U.S. Trade Policy

Agricultural Products Under TRQ

The U.S. maintains TRQs on numerous agricultural products, including:

Sugar (raw and refined)
Dairy (cheese, butter, milk powder)
Beef and lamb
Cotton
Tobacco
Peanuts

USMCA TRQs

USMCA includes specific TRQ provisions for trade between the U.S., Canada, and Mexico:

Canada provides TRQ access for U.S. dairy exports
The U.S. provides TRQ access for Canadian sugar and dairy
Automotive components have regional value content thresholds that function similarly

How Quota Allocation Works

TRQ volumes are typically allocated through:

First-come, first-served: Importers who apply earliest get in-quota access
Historical allocation: Based on past import volumes
License/auction: Government sells or assigns import licenses
Country-specific allocation: Quota volumes divided among specific exporting countries

TRQs and the 2026 Tariff Landscape

Section 122 Interaction

Section 122's 15% global surcharge applies on top of TRQ rates. This means:

In-quota sugar: 1.5% (TRQ rate) + 15% (Section 122) = 16.5%
Over-quota sugar: 65% (TRQ rate) + 15% (Section 122) = 80%

Canada Auto Proposal

Pierre Poilievre's "one-for-one" auto rule is functionally a TRQ concept: you get duty-free access for a specific volume (matched to your Canadian production), and higher duties apply beyond that. This approach may become a template for future tariff negotiations.

Why SMBs Should Care

If you import agricultural products or processed foods, understanding TRQ allocation timelines and procedures can mean the difference between a 2% and a 65% tariff rate on the same product. Many SMBs miss out on in-quota rates simply because they don't know the system exists.

Related: Most Favored Nation Rate | HS Code | Canada Tariff Retaliation Guide