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A tariff rate quota is a mechanism that countries use to agree to provide minimum import opportunities for products previously protected by non-tariff barriers. Under the system, imports within the quota are subject to lower tariff rates —or no duties — while higher rates are implemented above the concessionary level.
U.S. Trade Representative Robert Lighthizer and U.S. Secretary of Agriculture Sonny Perdue said Brazil will import 750,000 metric tons of U.S. wheat duty-free, before the tariffs kick in, which are typically imposed at a rate of 10 percent.
“We are excited about the additional export opportunity U.S. wheat farmers will have with the opening of this TRQ,” Perdue said in a statement referring to tariff rate quotas. “Exports are critical to the success of our farmers and the United States looks forward to once again having stable access to this important wheat market.”
Brazil had committed to implementing the quota for wheat imports when it became a member of the World Trade Organization in 1994. According to the administration, Brazilian President Jair Bolsonaro promised Trump earlier this year that he would implement the quota.
The relief may be needed for certain states in the Midwest, which are the states that have been most affected by the trade war with China, according to a recent report from Senate Democrats. And farm debt is expected to hit $416 billion this year, as reported by The Wall Street Journal.
As of 2018, Brazil was the 9th largest goods export market for the U.S., according to the office of the Trade Representative. The leading domestic agricultural export to Brazil was wheat, which totaled $59 million.
Trump has been touting his administration’s treatment of U.S. farmers. Most recently he has highlighted how farmers will benefit from the phase one trade deal with China, which he has said is close to completion. According to the terms of the partial deal, China has agreed to purchase between $40 billion and $50 billion worth of U.S. agricultural products.