What does a quota represent in international trade?

In international trade, a quota specifically represents a limit on the overall quantity of a certain good that can be imported into a country. This regulatory measure is used by governments to control the volume of specific commodities entering their markets. Quotas help to protect domestic industries by restricting foreign competition, thereby preventing an influx of foreign goods that might undermine local businesses.

Unlike tariffs, which impose additional costs on imported goods, quotas directly limit the amount that can be brought in, making them a different type of trade barrier. This is critical in regulating trade flows and ensuring that national economic interests are safeguarded. By establishing quotas, countries can encourage domestic production and manage trade balances more effectively.