| Term | Definition |
| trade surplus | occurs when the value of exports exceeds the value of imports |
| protective tariff | tax on imports designed to protect less efficient domestic industries |
| exports | goods and services produced in one country and shipped to another |
| tariff | tax on imports designed to increase their price in the domestic market |
| most favored nation clause | provision allowing a country to receive the same tariff reduction that the United States negotiates with a third country |
| revenue tariff | tax placed on imported goods that will generate revenue without prohibiting imports |
| balance of payments | difference between the money a country pays to and receives from other countries |
| foreign exchange | foreign currency used for international trade |
| trade-weighted value of the dollar | trade-weighted value of the dollar - index showing the strength of the dollar against a group of foreign currencies |
| North American Free Trade Agreement (NAFTA) | agreement among Canada, Mexico, and the United States to reduce tariffs |
| free traders | people who favor few or no restrictions on trade with other countries |
| quota | limit on the quantity of a product that may be imported |
| trade deficit | when the value of products imported exceeds the value of products exported |
| comparative advantage | ability to produce a product relatively more efficiently or at a lower opportunity cost |
| absolute advantage | a nation's ability to produce a given product more efficiently than another nation |
| fixed exchange rate | system under which the price of one currency remains unchanged in relation to the value of another currency |
| World Trade Organization (WTO) | international organization that settles trade disputes and organizes trade negotiations |
| dumping | selling products abroad at less than it costs to produce them |
