Does Terraform disregard values contained in .tfvars files?

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No, Terraform uses .tfvars files to read and assign variable values to the corresponding variables in the Terraform code. If a variable is defined in both the .tfvars file and the Terraform code, the .tfvars value will take precedence. However, if a variable is not defined in the .tfvars file, Terraform will use the default value in the code or prompt the user to enter a value during runtime if no default is set.