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Trade and Commerce

Definition

Trade involves buying and selling goods or services between countries or within a country while commerce includes all activities related to trade plus supporting activities like transportation, banking etc.

Analogy

Imagine trade as going shopping at different stores (countries) to buy what you need or want. Commerce would be not only your shopping but also your journey to get there - driving your car (transportation), using your credit card (banking), etc.

Related terms

Tariffs: These are taxes imposed on imported goods. They're like entrance fees you have to pay before entering certain shops.

Free Trade Agreement (FTA): An agreement between countries to reduce barriers such as tariffs on imports/exports among them. It’s akin to having VIP passes that allow you to shop without paying entrance fees.

Mercantilism: An economic theory that trade generates wealth and is stimulated by the accumulation of profitable balances. It's like a shopper believing that the more items they buy and sell, the richer they become.