Trading Around the World

Trade is exchanging one thing for another. People can trade goods for goods, good for services, or goods for money.

For example, let's say you baked cookies with your mom and made way too many. You have an over supply, and there's no way your family can eat all of them. What could you do?

1. You could sell the cookies. That would be trading the goods (cookies) for money.
2. You could give your friend cookies in exchange for water balloons. That would be trading the goods (cookies) for goods (water balloons).
3. You could give your neighbor cookies if they let you swim in their pool. That would be trading the goods (cookies) for a service (swimming in a pool).

In the case of all of these decisions, you are exchanging one thing for another, or trading.

Trade Between Countries

Countries also trade goods for goods, goods for services, and goods for money. Trade happens between countries often because one country cannot produce everything they need to survive. This is called international trade. International trade creates competition, which can lower the costs of the products to consumers (you).

Remember your clothing tag and the country it was made in? Because there is competition to make cheap clothing in foreign countries, consumers benefit by having affordable clothes to buy.

International trade allows countries to expand their markets with goods that may not have been available to them otherwise. In the United States, tea from China, coffee from Colombia, cars from Germany, and avocados from Mexico are just a few examples of some of the goods available through international trade.

International trade is occurring all the time with shipments of products coming in and going out of countries by boat, plane, train, and ground travel.