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Triangular Trade

Definition

Triangular trade is a multilateral system of trading in which a country pays for its imports from one country by its exports to another. In context of colonial America this involved raw materials sent from colonies to Europe; manufactured goods from Europe sent to Africa; slaves from Africa sent to Americas.

Analogy

Imagine you're at a three-way gift exchange party - you bring homemade cookies (raw materials) that you give to your friend who brought books (manufactured goods). Your friend gives those books to another friend who brought handmade crafts (slaves). That friend gives those crafts back to you completing the triangle.

Related terms

Mercantilism: An economic theory that trade generates wealth and is stimulated by accumulation of profitable balances through exportation more than importation.

Colonial Economy: Economic practices adopted by colonial powers in their colonies for their own benefit, often involving the export of raw materials and import of finished goods.

Indentured Servitude: A labor system where people paid for their passage to the New World by working for an employer for a certain number of years.