Trade is most beneficial when it is unencumbered by government interference. The only useful thing government can do regarding trade is to back people up against robbery, theft, fraud, or anything of that nature. Free trade is when there are no quotes, tariffs, or other trade barriers that impede transactions between individuals and businesses any where, be it local, regional, or global. Governments don’t trade with each other so there is no good reason for them to be involved in trade.

Trade is another of those simple economic principles that is blown up into an “issue” that doesn’t exist. The only situation where a balance of payments means anything is in individual transactions.  When someone offers something for sale, they will expect payment with something of equal value. Actually both parties to the transaction will get something they value more than what they gave up, but it is balanced.  If you buy all your groceries from a given store, the transactions are balanced.  You buy their products and they “buy” your money.  It does not matter that they don’t buy products or services from you. Neither does it matter for the combined transactions of individuals and businesses between cities, regions, or countries.  The transactions are balanced and the money will circulate around which is the reason for having a medium of exchange.

The freer the markets, the more prosperous the economy. Trade between countries is no exception.  The less that governments interfere with trade, the better off everyone will be.