International Trade Paper

Trading Amongst The United States and Canada

International Management

Introduction

Trade is defined as “to give in exchange for something else”. International trade has the same definition as trade with the inclusion of foreign lands conducting these transactions. Many countries participate in trading with their foreign neighbors and the United States and Canada are no different. This paper will examine the trade relationship of the United States and Canada. The role of the government in trade both import and exports will be discussed as well.

Why Trade

All countries have their own reason for trading with other nations. The general reason for international trade would be to obtain goods, services and resources not available, not readily available or limited supplies for the needs of that particular nation. It is know that some countries trade just to maintain a good international relationship with other countries. International trade can also be used as a way of leverage against other countries for various reasons including an influence for change or for power. Another reason for international trade can simply be countries know their respective opportunity cost and understand that it would be wise to participate in trading. In respects to the United States and Canada, both countries have goods the other nation desire. The United States exports billions of dollars in automobiles to Canada and in turn imports billions of dollars in petroleum goods from Canada.

Two Trade Flows Theories

Two trade flow theories that are relevant to the international trade relationship between to the United States and Canada would be the mercantilism and comparative advantage trade theory. Mercantilism is the theory that a country’s wealth is a result of the balance between its exports over its imports. Similar to bullionism, a belief that a country’s wealth consisted of its gold and silver possession. Government regulated trade through taxation to maximize the wealth of...