Global trade refers to the exchange of goods and services between two or more countries. For instance, the United States is a leading player in international trade, dealing in trillions of dollars annually.

Its main trade partners include Canada and Mexico, with machinery, automobiles, fuel, and electrical equipment being the primary goods exchanged.

International trade supports the growth of markets and provides access to products and services from other nations. It also creates more job opportunities and contributes to improved living standards.

Key Highlights International trade is the cross-border exchange of goods and services. The benefits of trade arise from comparative advantage, leading to greater consumption of goods. Global trade exists in three categories: imports, exports, and entrepot. Tariffs and import quotas are major protectionist policies in trade.

#1 Export Trade Export trade occurs when a country produces goods that are purchased by another nation. It is a way for one country to offer goods or services to benefit the citizens of another. In this process, the seller is known as the exporter. The UK’s top exports include cars, medicine, gold, and crude oil. China is the world’s largest exporter, with exports in 2022 amounting to $307,823 million, or 43.14% of the global export market.

#2 Import Trade Import trade happens when a country receives goods from another nation. A country imports when it cannot produce certain goods locally or when demand for the goods does not exist in the exporting country. Bahrain is the world’s largest importer, with imports reaching $1,339,469 million in September 2022, making up 57.29% of global imports.

#3 Entrepot Trade Entrepot trade involves the importation of goods into a country, which are then re-exported without being distributed within the importing country. In this model, the importer adds value to the goods before exporting them once again. For example, if India imports steel from Thailand, processes it, and then exports it to another country like Korea.