A tariff-rate quota (TRQ) divides import volumes into two tiers: a specified quantity — the in-quota amount — enters at a reduced or zero tariff rate, while imports exceeding that threshold face a higher over-quota rate. Governments use TRQs to balance domestic industry protection with international market access obligations, permitting some foreign competition while limiting unlimited low-cost imports.
In the 2025 US-UK Economic Prosperity Deal, the United States established a TRQ allowing 100,000 UK vehicles annually at a 10% tariff rather than the standard 27.5% auto tariff. Because UK auto exports to the U.S. totaled roughly 100,000 vehicles per year, the quota was calibrated to cover existing trade volumes while preserving the higher rate as a ceiling against expansion.
TRQs create distributional consequences: exporters who secure in-quota access gain a competitive advantage over those who cannot, making quota allocation a source of political and economic contestation. Critics argue TRQs can entrench existing trade patterns rather than opening markets genuinely.
Tariff-rate quotas determine whether imported goods face a low or high tariff — and who gets the low-rate access is a decision made by governments, not markets.
People often confuse tariff-rate quotas with import bans or flat tariffs. Unlike a ban, a TRQ allows imports at different price points depending on volume. Unlike a flat tariff, the rate changes once a quantity threshold is crossed.
Tariff-rate quotas determine whether imported goods face a low or high tariff — and who gets the low-rate access is a decision made by governments, not markets.
People often confuse tariff-rate quotas with import bans or flat tariffs. Unlike a ban, a TRQ allows imports at different price points depending on volume. Unlike a flat tariff, the rate changes once a quantity threshold is crossed.