What is a trading nation? Trading nations refer to nations that have open markets for international trade. A trading nation is generally a country in which foreign trade constitutes a large portion of its gross domestic product. This means that a nation’s goods and services are traded with other nations rather than with internal entities and the goods and services produced within the country. More specifically, it refers to the total value of all goods traded between a nation and its neighbors. By purchasing more goods and services from other countries, the domestic economy of a nation grows.
One of the most obvious examples of a trading nation would be China. Today, China accounts for the majority of the goods and services traded on the global market. While this is particularly true of the products that are purchased by the Chinese People’s State (the PRS) directly, it is also true of the products and services that are purchased indirectly through middlemen such as retailers in China, distributors in China, and suppliers in the United States, Europe, Japan, and South Korea. If these nations did not have access to the world-wide market, they would not be able to maintain the level of international trade that they do today.
Another obvious example of a trading nation would be Canada. Just as Canada is an open, free-market system for trade, it also provides for an excellent opportunity for Canadian exporters. Canada is home to many top companies that do much of their own international trade, including lumber companies, transportation companies, and chemical and pharmaceutical exporters. In addition, if Canada were to start restricting its domestic trade to only those domestic businesses that had products that were manufactured in Canada, many of these same companies would choose to manufacture their products elsewhere in order to continue doing business in Canada.
There is also a great deal of economic activity between the United States and Canada. Between our nations’ combined gross domestic product, we spend approximately two percent of our total GDP on our trade with each other. Most of this comes from exports. In fact, the United States and Canada make up the largest trading nation in the world, and when you include exports of our respective goods and services, the United States pulls out way ahead of all of our other trading partners. The United States is doing very well at keeping its share of global trade.
So, what can we learn from these numbers? First of all, it is apparent that the United States is a great trading nation. Second, and on a related note, it is also clear that Canadians are an exceptional trading nation. The top ten exported goods by the United States last year were largely manufactured in the United States. And the top ten highest exported goods by Canadians were all manufactured in Canada.
As it turns out, Canada is not a trading nation. However, they do enjoy a very strong economy because of the tremendous flow of exports. Canada is doing very well at exporting its goods and services to the U.S., but they are not doing that well at exporting to the rest of the world. It appears to me from the data that they are lagging behind the United States and need to catch up if they are going to maintain their current status as a first world country.