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Foreign Trade


Foreign trade, the exchange of goods and services between nations, has played an important role in national economies for centuries, helping domestic industries grow to serve foreign customers and allowing people to enjoy goods produced outside their own country. Trade has always been a major force behind the relations among nations, often helping to create alliances among friendly trade partners, but also leading to wars for control over raw materials or trade routes throughout world history.

Regulation and control of international trade relies on standard trade routes and fairly stable governments. Import taxes (tariffs) are levied against some import items to allow local producers to compete economically against foreign producers, and trade limits are sometimes set on items to keep the local market from being flooded with foreign goods. International trade agreements, however, often aim to open new markets for foreign goods where adequate supply for an in-demand good does not exist in a country.

Two key factors drive international trade. One is that one country can sometimes supply something that another cannot produce. The other is that although one country may be able to produce an item, it may be cheaper to make it somewhere else and have it brought in. Foreign trade enables each country to make the best use of its most abundant resources, including the unique talents of its workforce. In addition, foreign trade often involves building offices or factories in foreign countries, sending technical or other specialists abroad, and expanding the distribution of a product into international markets.

A country's balance of trade (relation of exports to imports) is an important measure of its economic health. Most economists believe that imports and exports should be equal in value, or exports should be higher, for a healthy national economy. When export shipments are smaller than imports, it means that money spent in other countries will not be returned. Economists often recommend policies that they believe will encourage a balance of trade in their country's favor. In recent years, trends have favored encouraging unrestricted trade among nations rather than creating trade barriers. However, in the case of the United States, the Trump Administration has taken a protectionist stance, prompting the renegotiation of agreements with key trading partners like Mexico and Canada, and resulting in a trade war with China that led to Phase One of a new trade agreement at the end of 2019.

As advances in information technology have made the world a smaller place, it is now easy for anyone, even in a remote area, to communicate with anyone else across the globe. This has increased the demand for foreign trade and has made it easier for workers to engage in it. The growth of foreign business and its importance to the national economy has created demand for individuals prepared to handle the complex problems of international business.

When trade arrangements are made, various jobs—and employees to fill them—are needed to organize, develop, and maintain the agreement. Jobs vary with the product or service offered and with the company's goals for the product overseas. Professions in foreign trade include purchasers, buyers, economists, marketing research analysts, clerical support, delivery and logistics experts, and support personnel. Other professions involved with foreign trade include accountants, interpreters and translators, and international affairs specialists.