An import quota is a limit on the quantity of a good that can be imported into a country in a given period of time. Quotas are normally used to protect domestic economies from foreign competition.
There are two main types of import quotas: absolute quotas and tariff-rate quotas.
- Absolute quotas set a fixed limit on the quantity of a good that can be imported.
- Tariff-rate quotas, on the other hand, set a lower limit on the quantity of a good that can be imported at a reduced tariff rate. Once the quota is reached, all following imports are subject to a higher tariff rate.
Import quotas can be used to achieve several economic goals, including:
- Protecting domestic economies from foreign competition by limiting the amount of foreign goods that can be imported into the country.
- Stabilizing prices for domestic goods by limiting the supply of foreign goods in the market to prevent prices from falling too low, which hurts domestic producers.
- Raising revenue for the government by charging a tariff on imported goods. This revenue can be used to fund government programs or to reduce the deficit.
To better understand import quotas and how they can benefit you, reach out to our customs specialists.
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