North American Trade Agreement (NAFTA)
Definition
NAFTA is a trade agreement between the United States, Canada, and Mexico that eliminates tariffs and other barriers to promote economic integration among the three countries.
Analogy
Imagine you and your two best friends decide to start a club where you can freely share your toys without any restrictions. That's what NAFTA is like - it creates a special club for trade between the US, Canada, and Mexico where they can exchange goods without barriers.
Related terms
Free Trade: The policy of allowing goods to be traded between countries without tariffs or other restrictions.
Tariffs: Taxes imposed on imported goods to make them more expensive and protect domestic industries.
Economic Integration: The process of combining economies through agreements that reduce barriers to trade and investment.
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