What is the Difference between tariff and quota?

Answer: Tariffs are taxes, or the amount of money a country needs to pay for trading products. Quotas are the limitations on what is traded, how much is traded, how much is paid for each product traded,and where its traded. Tariffs are more beneficial to a country's economy because the amount of money paid for their products raises their country's GDP. Quotas aren't because they put limits on how much is paid, and that is what makes GDPs neutral.

The Benefits of Tariffs & Quotas

The World Trade Organization argues for free trade based on the idea that increased competition strengthens industries by increasing innovation and invention. Lower labor and overhead costs in developing countries, however, might result in challenges for companies in industrialized nations to remain competitive. Tariffs and quotas are intended to protect domestic producers, thereby saving domestic jobs and reducing the effect of world trade on the environment.

Government Benefits

The government receives revenue as a result of both tariffs and quotas. Tariffs are a tax on imported goods, and therefore directly benefit the governmental recipients. Quotas also benefit the government because protected domestic corporations keep people employed. This not only reduces the need for government assistance, but it ensures that people are able to pay sales, property and income taxes.

Consumer Benefits

On the surface, tariffs and quotas appear to hurt consumers by maintaining higher prices. However, protecting domestic jobs strengthens the economy by preventing increases in unemployment. Workers paid a reasonable living within the United States then have income available to spend on goods and services. Manufacturers still must be careful not to over-inflate their prices so that supply does not exceed demand, but tariffs and quotas can help them compensate for the lower overhead costs incurred by foreign manufacturers.