Trade is movement of goods between two markets through commercial transactions. In Victoria 3, trade occurs between national markets (not between businesses or nations). Trade has many benefits, such as allowing a nation to gain access to a good which is expensive in its own market, but cheap and plentiful in another. Alternatively, a nation may seek to export a good to another market, increasing the price of that good locally allowing buildings producing it to increase their profitability and hire more employees (which may then be taxed by the country depending on its laws). Trade is facilitated through trade centers, which are automatically built in states in a similar way as urban centers. The player does not have direct control over their market, but can instead influence it through several ways including tariffs, embargoes, trade routes, and agreements.
Trade routes[edit | edit source]
Trade is conducted through trade routes, created by either the player or the AIs running the other nations. A trade route may be either an export route or an import route. Each route trades in one good only. Each trade route starts at level 1 and slowly grows or shrinks on a weekly basis, depending in the route’s profitability and other factors. The profitability of a route is calculated as follows:
- The good being the subject of a trade route has a purchase price and a sale price.
- The purchase price is calculated from the average between the price of the good in the export market if there were no trade route exporting the good and the price including all the trades.
- The sale price is calculated in a similar way in the importing market.
- These prices are then modified by adding the cost of any tariffs, which are calculated against the base price of a good (not its market price).
- The profitability is the difference between the purchase price and the sale price.
Note: As tariffs are levied on the base price of a good, not its market price, this has the effect of disproportionally affecting high volume, low value trades (such as those for base resources such as coal or wood). As the volume of goods traded increases, the difference between the sale price and purchase price gets closer and closer. Therefore, tariffs reduces the profit more and more until it is more profitable to stop growing the trade route level or even to reduce it. Tariffs on expensive, low trade volume goods are less likely to be affected by tariffs as they are less likely to be significantly overproduced and cheaper in another market.
Each trade route costs 20 bureaucracy to maintain, unless the two countries have a trade agreement pact. Additionally, trade routes between non-adjacent markets require convoys, with the amount of convoys dependent on the type of good, level of the trade route, and distance between trade ports.
Customs unions[edit | edit source]
Another way a nation may trade with another is through joining their customs union thereby participating in their national market. A nation may join a customs union through a diplomatic action or due to being a subject of the other nation. The effect of this is that the junior member’s market ceases to exist and prices are set depending on the sell and buy orders of all participants in the customs union. Additionally, trade routes are not required to access the larger market, freeing up convoys to be used to trade with others. However, the market access of a state is then determined by its connection to the market capital, which may cause disruptions to an economy if it is far away and the market leader does not have enough convoys to ensure 100% market access. Additionally, trade centers that used to profit on trade routes between yourself and the country whose market you have joined are no longer required, potentially leading to higher unemployment and less revenue.
Trade centers[edit | edit source]
Trade centers represent the section of your economy facilitating trade with another country. Goods are not automatically transported from one place to another; they must be bought, shipped and moved (with the associated opportunities for profit that comes along with this). Trade centers must also be staffed and are usually privately owned, generating wealth and wages for the pops that work there. The profit can then be taxed in the same way as other buildings and pops are, depending on the laws of your country. Trade centres are more likely to appear in market capitals and states with ports.
Embargoes[edit | edit source]
As a nation does not require permission to establish a trade route, to discourage trade (for example to protect a small, but growing local industry) a nation must use other methods, the most important being tariffs and embargoes. Embargoes are created by an ongoing diplomatic action that severely limits the amount of goods that may be bought or sold by another country. However, they are not absolute as smugglers and other groups may still seek to profit despite the wishes of the state.
Tariffs[edit | edit source]
Instead of outright banning trade, tariffs can be used to make trading in certain goods unprofitable, thereby reducing the amount of goods bought or sold. Tariffs are a tax levied on all goods being traded, adding funds to the nation’s treasury whilst also making that good less profitable to trade. Tariffs are set independently for each individual good, and can be set to No Priority, Prioritize Imports, or Prioritize Exports. For example, a nation may remove import tariffs and raise export tariffs on artillery and weapons to ensure prices are low and enough goods are available for your army, whilst raising import tariffs and removing export tariffs on furniture to keep prices higher, allowing those factories to remain profitable while remaining at full employment.
A country's ability to influence tariff levels depends on its Trade Policy law, which changes the effect of each tariff setting. With the No Priority setting, Protectionism has a 10% tariffs on both imports and exports, and Mercantilism has 15% tariffs on imports and 5% tariffs on exports. Changing to Prioritize Imports or Prioritize Exports removes the tariff on that type of route and doubles the tariff on the other type. With the Free Trade law, no tariffs are collected, and with Isolationism, no trade routes are allowed.
Treaty ports[edit | edit source]
Treaty ports are a method for a nation to bypass any embargoes or tariffs a nation may impose. Treaty ports are gained through diplomatic plays. A country who gains a treaty port in another nation may bypass any tariffs or embargoes in a market adjacent to the treaty port. This is an option for stronger nations to gain access to other markets.
References[edit | edit source]
Dev diary 54 Dev diary 38