Trading With Other Countries
Learn what imports and exports are, why places trade, and how trade makes countries depend on each other.
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Why trading with other countries matters
At lunch, you have a sandwich and an apple. Your friend has pretzels and a banana. You do not want your apple today, and your friend is tired of pretzels. So you swap.
Neither of you made anything new. You both ended up with a lunch you like better. That simple idea, scaled up enormously, is trade between countries.
Imports and exports
Imports are goods coming in to a country. Exports are goods going out. The trick for remembering: imports come in, and exports exit.
Every trade is both at once. When a crate of bananas leaves a warm country and arrives at your grocery store, those bananas are an export for the country that grew them and an import for yours. Same crate, two names.
Why places trade at all
Places are different, and that is the whole reason.
Bananas need warmth and rain almost all year, so they grow easily near the equator and poorly in a cold country. Wool comes from sheep, and sheep do well on cool, grassy hills. Some places sit on mountains full of useful metals, and some have none.
That is the heart of it. Each place does what it does well, then trades for the rest. It is specialization again, with oceans in between.
Two countries, two climates
Imagine a warm island where bananas practically grow themselves, and a cool country with grassy hills covered in sheep. The island could raise sheep, but its grass is thin and the heat is hard on them. The cool country could build banana greenhouses, but the heating bills would be enormous. So the island sends bananas out and the cool country sends wool out.
What trade gives you, and what it costs
Walk through a grocery store in winter and look at the fruit. Some of it could not have grown nearby in that season. That variety is trade.
But there is a trade-off. When a country buys something instead of making it, it depends on the places that do make it. If storms wreck a harvest far away, the price at your store can change even though nothing happened in your town.
What to remember
Ask two questions about anything in your kitchen. First: could this have been grown or made near here? A jar of local honey, probably yes. A pineapple in January, probably not. Second: if it came from far away, what did this country send out in exchange? Trade is never one direction only, which is why both sides agree to it.
How to think it through
Here is a way to test whether trading makes sense. It works for countries and for kids.
- What am I good at? For a country, that might be a climate, a mineral, or a skill many workers have. For you, maybe you are quick at math or great at drawing.
- What would cost me a lot to do myself? The cold country and its banana greenhouse.
- Is there somebody in the opposite situation? If yes, a trade can leave both sides better off.
Then add one more question: what happens if my trading partner cannot deliver? Not to stop the trade, but so you are not surprised.
Fun fact
A single object in your house may have crossed more borders than you have. The metal inside a phone might be mined in one place, refined in another, built into a part in a third, assembled in a fourth, and sold in a fifth. Nobody planned that journey start to finish.
Your class finds that the bananas in the school cafeteria were grown far away in a warm country.
A classmate says the school should only buy food grown nearby. How do you think it through?
Practice the idea
A crate of bananas is grown in a warm country and shipped to a grocery store in a cold country. What are those bananas?
A cold country has grassy hills perfect for sheep but would need expensive heated greenhouses to grow bananas. What is the sensible plan?
Storms damage the fruit harvest in a faraway country, and weeks later the price of that fruit changes at your local store. Why?
Bring it into your life
Go to your kitchen and pick up five things: a fruit, a snack, a spice jar, a drink, and one item that is not food. Look for a line saying where it came from. Sort them into two piles: probably made near here, and probably from far away. Then pick the most surprising one and ask what your country might have sent out in return.
Imports are goods coming into a country and exports are goods going out, and every trade is one of each depending on which side you are on. Countries trade because places differ in what they can grow, make, or mine, so each does what it does well and trades for the rest. Trade gives people far more variety than one country could produce alone, and the cost is that countries depend on each other.