What Is Trade?
The modern era of global trade began just after World War II.
Trade, a topic you might think is limited to economics wonks, has stunningly broad consequences. Trade determines what you can buy and where you can work. It can affect hormone levels in a supermarket chicken, the pictures printed on cigarette packages, and minimum wage laws around the world. If you work in an industry that imports or exports—and you likely do, or will—the effects are even clearer: business decisions are constantly made based on the cost of trade with other countries.
Trade has been around for centuries—think of the Silk Road—but it was not always quite so global. The era of modern global trade can be traced to just after World War II, when countries decided to create rules around international trade to make it more beneficial for everyone.
These rules worked: global trade took off in the mid–twentieth century, and with it, the global economy. But the post–World War II rules could not anticipate all modern challenges, and the stakes of trade disputes continue to grow as more countries participate in global trade at ever higher levels.
In this module, we will
- learn about the concept of free trade, and why the reality looks different from the ideal;
- understand the meaning of the U.S. trade deficit;
- follow the production of a sneaker from Vietnam to California;
- learn about the purpose and evolution of trade agreements;
- discover the consequences of China joining the World Trade Organization;
- examine the connection between trade and foreign policy through the 1930 Smoot-Hawley Tariff Act; and
- learn the basics of foreign investment from a Council on Foreign Relations economics expert.