What is a tariff-rate quota?

What is a tariff-rate quota?

• A. A tariff that increases with value of goods.
• B. A limit that applies to export shipments.
• C. Permits a specific quantity to enter at a low tariff rate, but any amount over that limit is charged a much higher tariff.
• D. A tax on exporters.

Answer: (C)

A tariff-rate quota sets a specific quantity of goods that can enter at a low tariff, and once that quota is filled, any additional imports face a much higher tariff. This design lets countries protect domestic producers for a defined volume while still allowing more competition beyond that limit, but at a steeper price. It’s not a tariff tied to the value of shipments, it’s not an export limit, and it’s not a tax on exporters.

A tariff-rate quota sets a specific quantity of goods that can enter at a low tariff, and once that quota is filled, any additional imports face a much higher tariff. This design lets countries protect domestic producers for a defined volume while still allowing more competition beyond that limit, but at a steeper price. It’s not a tariff tied to the value of shipments, it’s not an export limit, and it’s not a tax on exporters.