What trade mechanism lets a limited quantity enter at a lower tariff than additional imports?

A tariff-rate quota lets a limited quantity enter at a lower tariff than additional imports.

This mechanism combines a quota with two tariff levels. Imports within the specified quantity, called the in-quota amount, receive a lower duty. Once that quantity is filled, further imports may still be allowed, but they face a higher out-of-quota tariff rather than an absolute numerical ban.

Tariff-rate quotas are used in trade agreements and agricultural policy. Products such as sugar, dairy, meat, and some grains have commonly been managed through these arrangements. They differ from ordinary quotas, which limit the quantity that may enter, and from a single tariff, which applies one principal duty rate.

The term is sometimes shortened to TRQ. Allocation can be administered through licenses, first-come systems, historical shares, or other national procedures, depending on the agreement and product.