Tariff Rate Quotas Are Gone. What Does That Mean for Your Business?

In a significant shift in U.S. trade policy, the Trump administration has eliminated Tariff Rate Quotas (TRQs), removing a key mechanism that previously helped regulate stainless steel imports. TRQs, which allowed a certain volume of imported metal to enter at reduced tariffs before triggering higher duty rates, played a crucial role in supply chain planning and cost management for manufacturers.

Now, without TRQs in place, all imported stainless steel is subject to the full Section 232 tariff rate, eliminating previous country-specific allowances and exclusions. For metal buyers, this means increased cost certainty in the short term but also the potential for renewed pricing volatility and supply chain shifts. In this article, we explore how TRQs historically shaped stainless steel pricing, what their removal means for buyers, and how Ulbrich helps businesses stay competitive in an evolving trade environment.

What Are TRQs?

A Tariff Rate Quota (TRQ) is a two-tiered trade mechanism designed to control the volume of certain imported goods while maintaining economic protections for domestic producers. Under a TRQ, a specific quantity of a product—such as stainless steel—is allowed to enter the U.S. at a lower or zero tariff rate. Once that quota is exceeded, any additional imports face higher tariff rates.

The TRQ system was first developed as a compromise between full import restrictions and free trade, often used in agricultural and industrial sectors to balance domestic production with necessary imports. It functions within the Harmonized Tariff Schedule (HTS), which determines how goods are classified and what duty rates apply. For stainless steel buyers, understanding HTS codes is critical in navigating TRQs efficiently, as different classifications may carry different quota thresholds or tariff implications.

How Quotas Work and Who Sets Them

Quotas are determined by trade agreements or national policies and vary by country, material type, and economic demand. In some cases, specific countries are assigned their own quota limits, while others must compete in a shared global quota. These limits are typically reset on a rolling basis, such as quarterly or annually, meaning timing purchases strategically can have a significant impact on costs. When it comes to steel, these limits are set quarterly per country and per product.

Exclusions and Their Impact

Before the TRQ program and exclusions were eliminated, certain exclusions could be requested by companies outside of TRQ programs, allowing specific imports to bypass the higher tariff until the exclusion quota is met. These exclusions were granted based on necessity, supply chain disruptions, or national security considerations. Once an exclusion quota was met, additional company-specific exclusions were issued selectively, often through government applications or lobbying efforts by industry stakeholders.

The Real-World Effect

Imagine you're a manufacturer relying on imported stainless steel to maintain production. You’ve budgeted for a lower duty rate, but suddenly, a quota is met faster than expected. Now, the additional shipments you planned are subject to much higher tariffs, throwing off your entire cost structure. This is exactly why understanding TRQs is critical—companies that closely track quota thresholds and leverage exemptions effectively can maintain a competitive edge in volatile markets.

TRQs and the First Trump & Biden Administration

The first Trump administration implemented Section 232 tariffs in 2018, imposing a 25% tariff on imported steel and a 10% tariff on aluminum to protect national security interests.

However, recognizing the need for flexibility in supply chains, the Biden administration later introduced country-specific TRQs for certain trade partners, including the European Union, South Korea, Argentina, and Brazil.

Effects of TRQs on Stainless Steel Pricing and Availability

• Initial Price Spikes: When TRQs were first introduced, they created significant uncertainty in the market. Stainless steel prices surged as buyers rushed to secure supply before hitting quota limits.

• Sourcing Shifts: Many buyers had to restructure their supply chains, turning to domestic mills or alternative international suppliers that were not subject to TRQs. Ulbrich offers our customers a wide variety of domestic sourcing options and American manufacturing facilities.

• Market Volatility: The quotas led to sharp fluctuations in availability, causing some months where stainless steel imports flowed freely and others where additional shipments triggered high tariff penalties, making sourcing unpredictable.

• Contract Negotiations: TRQs forced long-term contracts to include contingency plans, with many companies negotiating pricing mechanisms based on whether quotas had been exceeded.

What Can We Expect in a New Trump Administration?

As of publication, TRQs have been eliminated from US trade policy. If the Trump administration reinstates TRQs, buyers should anticipate several key impacts:

• Renewed Pricing Volatility: Expect stainless steel prices to respond to changes in import quotas, with potential shortages driving costs higher when quotas are met.

• Increased Compliance Requirements: With TRQs layered on top of Section 232 tariffs, metal buyers will need to be diligent in tracking quota usage and ensuring HTS classification accuracy to optimize sourcing.

• Potential Trade Negotiations: As before, the administration may negotiate country-specific exemptions or adjustments, meaning certain suppliers could have preferential treatment.

• Supply Chain Adjustments: Manufacturers may once again shift purchasing strategies, either securing domestic sources or working with partners who can navigate TRQs effectively.

How Ulbrich Helps Buyers Navigate Trade Policy

At Ulbrich, we have deep expertise in international trade and a broad network of global and domestic supply partners to help customers navigate these complexities. Our team continuously monitors trade policy changes, ensuring that our customers remain compliant and competitive regardless of shifting regulations.

If you’re looking for expert guidance in managing TRQs and securing your metal supply, reach out to Ulbrich today.