Why do countries trade with each other, what does the UK import and export, and why might a country put up trade barriers?
Global trade: imports and exports, why countries trade, the UK's main trading partners, and trade barriers such as tariffs and quotas.
A focused answer to the SQA National 5 Economics content on global trade, covering imports and exports, the reasons countries trade, the UK's main trading partners, and trade barriers such as tariffs, quotas and embargoes along with the arguments for and against protection.
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What this dot point is asking
The SQA wants you to explain global trade: what imports and exports are, why countries trade with each other, who the UK's main trading partners are, and the trade barriers a government can use to protect its own industries.
Imports and exports
International trade is the exchange of goods and services across national borders. National 5 expects the two basic terms to be precise.
For the UK, exports include cars, whisky, financial services and pharmaceuticals; imports include cars, oil, food and electronics.
Why countries trade
No country can produce everything its people want, so trade is essential. National 5 expects you to explain the reasons:
- Some goods cannot be produced at home at all (climate, resources), such as tropical fruit, certain minerals or oil.
- Other countries can produce some goods more cheaply or to a higher quality, so it is better to buy from them.
- Specialisation: if each country concentrates on what it does best and trades for the rest, total output rises and everyone can consume more - the same logic as specialisation within an economy.
- Trade widens consumer choice and, through competition, helps keep prices down.
The UK's main trading partners
The UK trades with countries all over the world. Its largest trading partners include the countries of the European Union (EU) (such as Germany, France, the Netherlands and Ireland), the United States, and China. The UK trades with the EU as neighbouring economies, with the USA as a large advanced economy, and increasingly with fast-growing emerging economies such as China and India.
Trade barriers and protection
Sometimes a government wants to protect its own industries from foreign competition, so it puts up trade barriers (protectionism).
The arguments are balanced. Protection can save jobs, shield a new (infant) industry while it grows, and guard against unfair "dumping" of cheap foreign goods. But it raises prices for consumers, can provoke retaliation (other countries raising their own barriers), and reduces the gains from specialisation and free trade.
Why this matters across the course
Global trade is the heart of the global economy area. Exports and imports are the overseas injections and withdrawals in the circular flow from the UK economy area, and they connect directly to exchange rates (which change the price of exports and imports) and to multinationals. Trade also links back to specialisation in the UK economy area.
Try this
Q1. Define an export. [1 mark]
- Cue. A good or service a country sells to another country (money flows in).
Q2. Name two trade barriers. [2 marks]
- Cue. Any two of tariff, quota, embargo (or subsidy to home firms).
Q3. Explain one reason a country might trade with others. [2 marks]
- Cue. It cannot produce some goods itself, or others make them more cheaply, so trade widens choice and lowers cost.
Exam-style practice questions
Practice questions written in the style of SQA exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
SQA N5 specimen4 marksDescribe the difference between imports and exports and explain one reason why the UK trades with other countries.Show worked answer →
Imports are goods and services bought by the UK from other countries (money flows out), while exports are goods and services the UK sells to other countries (money flows in) (1 mark for imports, 1 mark for exports). The UK trades because it cannot produce everything it needs, or cannot produce some goods as cheaply or at all, such as tropical fruit or certain raw materials (1 mark). Trade lets each country specialise in what it does best and buy the rest, raising the range and lowering the cost of goods (1 mark). Markers reward the import/export distinction plus a developed reason to trade.
SQA N5 past-style6 marksExplain three methods a government could use to protect its industries from foreign competition.Show worked answer →
A government can place a tariff (a tax) on imports, which raises their price and makes home-produced goods relatively cheaper, encouraging people to buy local (1 mark + 1 development). It can set a quota, a physical limit on the quantity of a good that may be imported, reducing the competition home firms face (1 mark + 1 development). It can impose an embargo, a complete ban on trade in a good or with a country, or use subsidies to lower home firms' costs (1 mark + 1 development). Markers reward three distinct, developed methods of protection (tariff, quota, embargo, subsidy).
Related dot points
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A focused answer to the SQA National 5 Economics content on exchange rates, covering what an exchange rate is, appreciation and depreciation of the pound, and how a change in the exchange rate affects the prices of imports and exports for individuals, firms and the wider economy.
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A focused answer to the SQA National 5 Economics content on multinationals, covering what a multinational company is, the reasons they choose where to locate such as cheaper labour, access to markets and resources, and their advantages and disadvantages for a host country like the UK.
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Sources & how we know this
- SQA National 5 Economics Course Specification — SQA (2026)
- National 5 Economics - Course overview and resources — SQA (2026)