international trade

International trade refers to commerce that occurs across national borders. An illustrative example is the importation and exportation of goods and services across national borders. The term international trade may also include foreign direct investments, especially in cases where the foreign investment impacts trade in goods and services. 

International trade is governed both by applicable local laws and by international treaties. These international treaties are negotiated by participating nations to address a wide range of trade issues, such as customs duties, dumping, embargoes, free trade zones, intellectual property, quotas, and subsidies.

In the United States, international trade is an area of exclusive federal jurisdiction. Within the federal government, responsibility for international trade is shared between the legislative and the executive branch. 

The legislative branch is responsible for regulating commerce between the United States and foreign nations. The Commerce Clause of the U.S. Constitution empowers Congress to “regulate commerce with foreign nations,” U.S. Const. Art. I, § 8, cl. 3. Other Article I provisions empower Congress to “lay and collect taxes, duties, imposts, and excises,” id. at Art. I, § 8, cl. 1. Pursuant to this authority, Congress has enacted numerous federal statutes, including the Tariff Act of 1930, the Trade Act of 1974, and the Trade Agreements Act of 1979.

The executive branch of the United States is responsible for making international treaties. Article II of the U.S. Constitution empowers the President, “by and with the advice and consent of the Senate, to make treaties, provided two thirds of Senators present concur.” Pursuant to this authority, presidents have negotiated numerous international treaties and trade agreements, including the Marrakesh Agreement Establishing the World Trade Organization, the Agreement on Trade-Related Investment Measures (regarding trade in goods), the Agreement on Trade-Related Aspects of Intellectual Property (regarding intellectual property), and the USMCA. Currently, the United States has free trade agreements in force with 20 nations.

[Last updated in June of 2023 by the Wex Definitions Team]