What are import quotas?

Import quotas are specific numerical limits set by a government on the quantity of a particular good that can be imported into the country during a specified time period. This measure is often implemented to protect domestic industries from foreign competition, manage supply for certain commodities, or ensure market stability. By capping the number of goods that can enter the market, the government can control the availability of those goods, potentially leading to higher prices for domestic producers.

The nature of import quotas directly relates to the regulation of the flow of goods across borders, distinguishing them from other types of trade terms. For example, limits on shipping costs or the duration of shipments do not influence the actual quantities of goods that can cross borders but rather pertain to logistics and operational costs. Meanwhile, restrictions on the types of goods that can be exported fall outside the framework of import quotas, focusing instead on outbound trade rather than incoming goods. Therefore, understanding the specific function of import quotas is essential for grasping trade policy and its implications for domestic markets.