Quota

While a tariff makes imports more expensive, a quota directly limits how much can come in. For example, a country might allow only 100,000 tonnes of sugar to be imported each year.

By restricting supply, an import quota usually raises the domestic price of the product. This benefits domestic producers, who face less foreign competition and can sell at higher prices. It costs consumers, who pay more and have less choice.

Unlike a tariff, a quota does not automatically raise revenue for the government. The extra profit created by higher prices often goes to the businesses that hold the right to import the limited quantity. Governments sometimes sell import licences to capture some of this value.

Quotas can be used to protect strategic industries, to manage trade relationships or to prevent sudden surges of imports. They are generally considered less transparent than tariffs and are restricted under many international trade agreements. The word "quota" is also used in other contexts, such as fishing quotas that limit catches to protect fish stocks.