In the world of finance, “trading nation” may sound like a contradiction in terms, but it actually refers to a certain type of country that is characterized by strong international economic relations. A trading nation is usually a country that makes up an appreciable portion of its total economy through trading. This type of nation has an immense interest in trading with other nations. This nation may be interested in exporting its goods and services to other nations, and it also may be interested in importing goods and services that are produced by other nations. If a trading nation does not completely focus on international trading, it could find itself quickly losing a great deal of money.
When a nation that is focused on international trade does not have the correct policies or procedures in place to facilitate that type of trade, then it is in danger of suffering a severe loss. The primary way that this occurs is through protectionism. If a nation that is involved in international trade does not want to let certain products cross its borders, then it can have a serious negative impact on its gross domestic product growth. Many countries have tried to limit the export of specific products, and services because of this protectionist policy. For example, in China there has been an ongoing campaign to keep global currencies from strengthening versus the dollar.
China is currently the largest provider of goods and services that are exported to the United States. China has a huge economy, and its trading relationship with the United States is one of the most important relationships in the world. If China were to limit its exports in any way, that would hurt the U.S. economy very severely. International trade is important for both the United States and China. If the two countries were to cut their international trade without any reciprocal action from the other nation, that would also have a severe negative effect on the U.S. economy. To protect the American economy from any adverse impact from a trading nation, the United States must maintain a highly protective trade policy toward foreign nations.