North American Free Trade Agreement (NAFTA)
Definition
NAFTA is a treaty made by the United States, Canada, and Mexico that eliminated most tariffs and trade barriers among the three countries to encourage economic integration.
Analogy
Think of NAFTA as a group project in school where everyone agrees to share their resources freely without any restrictions. This way, they can create a better end product together.
Related terms
Trade Barrier: A government-imposed restriction on the free international exchange of goods or services.
Tariff: A tax imposed on imported goods and services.
Economic Integration: The unification of economic policies between different states through the partial or full abolition of tariff and non-tariff restrictions on trade.
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