THE BITTER QUARREL over imported automobiles will now swing over to Congress and the incoming Reagan administration.The U.S. International Trade Commission told the American automobile industry yesterday that it had no claim, under the trade laws, for protection from its Japanese, under the trade laws, for protection from its Japanese competitors. The commission found that the companies losses and layoffs were caused not by foreign competition, but by the recession plus high gasoline prices plus the American companies' own delays getting their small cars into production.

That finding is factually correct -- although they object vehemently -- probably also in the best interests of the American industry and the people who work for it. Protection would only encourage further delays in the race to produce more and better small cars, a transition that is expensive, difficult and necessary.

The losers in this case -- the Ford Motor Company and the United Auto Workers -- will probably turn to Congress next. One of Michigan's senators, Donald W. Riegle, has been promoting a resolution calling on President Carter to negotiate what the lawyers call voluntary -- which means involuntary -- quotas on imported cars. In response to the objection that voluntary quotas would violate American antitrust law, the resolution offers an exemption to the law. There you have a warning of the danger implicit in trade-limiting deals. They invariably and inevitably reduce competition. Under import quotas, the American auto market would be wholly dominated by General Motors -- not necessarily a happy prospect for the smaller companies now crying for protection. Incidentally, General Motors -- to its credit -- has not supported the campaign for quotas.

Since Congress is unlikely to have time to act on the Riegle resolution this year, the question will be laid before the Reagan administration in January. The Reagan administration, everyone sagely agrees, will favor business. Very well, but which businesses? Most economic issues, as governments deal with them, do not pit business against the forces of militant socialism, or the Empire. Economic policy generally requires choices among different and conflicting business interests, and the auto case is an example. The quotas could push up Ford's sales, but only by pushing down Toyota's and Datsun's sales. That threatens the Americans who work for the importers' networks of dealers and distributions. When you hear about the several million American jobs that depend on the health of the automobile industry, you might keep it in mind that those numbers include the Americans who sell and service the foreign cars.

Mr. Reagan has chosen economic advisers who, in general, are strongly inclined toward open markets and international competition. They will probably decide to wait a bit and see what happens in the automobile market. The three major manufacturers all have efficient new models in production. If a recovery from the recession begins next year, it will carry auto sales upward. Economic growth in a competitive, open market offers the American automobile makers far more than any import quotas can.