What is global trade?

If you look at all the labels of different products in your home, you will find that many of them were produced outside of the United States, most likely in China. You may wonder how products from China end up in the United States? The answer is through global trade.

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In the simple sense, the action of trading involves giving and receiving something. For example, someone may trade baseball cards with their friends. Global trade refers to the movement of goods and services between countries worldwide. The two major terms involving global trade are exports and imports.

Exports are goods and services that a country sends to other countries. For example, Company A may manufacture cars in the United States and export them to Germany to be sold. Since 2009, China has been the largest exporter of goods in the entire world. The United States’ biggest exporting product are food and beverage items.

Imports are goods and services that a country receives from other countries. Using the pervious example, Germany would be importing cars from America. The United States is the largest importer of goods in the world and its number one import is oil.

So, why do countries trade after all? Companies trade to gain access to goods and resources that may not be readily available to them. For example, the United States imports hundreds of billions of dollars in oil every year from the Middle East because it has an abundance of this resource. Countries also trade to expand their markets and help businesses grow.

The next time you purchase something, look at the product label. You may be surprised to see where it came from!