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An import quota is a government-imposed limit on the quantity of a specific good or service that can be imported into a country during a set period. Unlike tariffs, which are taxes on imports, quotas restrict trade by setting an absolute limit on the volume of imports.1

Quotas can lead to higher domestic prices for the restricted commodity if the imported quantity falls below what would have been imported without the restriction. If the government doesn't license importers to capture the price difference, this can create private profit opportunities. Quotas can also be used as economic weapons, applied selectively to certain countries. While quantitative restrictions were common after World War I and during the Great Depression, many countries began dismantling them after World War II.1

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