International trade is essentially the trade that is carried out between two countries which involves the exchange of capital goods. People have been involved in inernaitonal trade since ages with trade of spices and silk between various historical cities like china and India. During these times there were set routes through the land which were utilized by traders to exchange goods, a few examples of these trade routes in the Amber road and the silk road.
In today’s world international trade has been rapidly on the rise and is become a necessity because of dependence on certain commodities which are now available in the country which imports it. The modern international trade is being constantly changed by the increasing industrialization, globalization, outsourcing, multinational corporations, transportation, and other such causes are modifying the trade relation of countries all around the world.
International trade is run on the same principles that domestic trade is handled. There is still exchange of currency for goods and services involved. It has one major difference which makes international trade more costly than domestic trade. In international trade involves costly additions to the cost of the product like custom duty, tariffs, and many other such additions to the cost of the commodity that is being exchanged. International trade also involved trading of services where trading labor is not an option. Here instead work hours are traded for money between two countries. International trade is regulated by treaties such as World Trade organization and General Agreement on Tariffs and Trade. These treaties were born out of necessity after the world war II.
The two most important commodities or the two largest exchanged commodities are agriculture products and petroleum products. These make a major chunk of international trade. Many companies rely on international trade to run their global businesses.