Quota

By John Philip S. Chan (IR-358)

What is a 'Quota'

A quota is a government-imposed trade restriction that limits the number, or monetary value, of goods
that can be imported or exported during a particular time period. Quotas are used in international trade
to help regulate the volume of trade between countries. They are sometimes imposed on specific goods
to reduce imports, thereby increasing domestic production. In theory, this helps protect domestic
production by restricting foreign competition.

BREAKING DOWN 'Quota'

Quotas are different than tariffs, or customs, which place a tax on imports or exports in and out of a
country. Both quotas and tariffs are protective measures imposed by governments to try to control trade
between countries, but quotas focus on providing limits by defining the quantities of a particular good
that will be accepted, while tariffs impose a specific fee on those goods seeking entry into the United
States

The fees associated with tariffs are designed to raise the overall cost to the producer, or supplier, seeking
to sell goods within the United States and serves as a way to encourage outside goods to be priced for
higher sale prices than if the tariffs were not in place.