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Victoria 3 - Dev Diary #54 - Trade Revisions

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Hello and welcome to another Victoria 3 development diary. Today is going to be a slightly different diary, as instead of bringing up a system we haven’t previously covered we’ll be talking about a whole bunch of changes that have happened to Trade, which was previously talked about in Dev Diary #38.

As is fairly common knowledge, we are constantly iterating on our systems, and even when something has been written about in a dev diary that doesn’t mean we’re a hundred percent happy with it or aren’t looking to tweak it in some way. For Trade specifically, there were two main issues that were brought up repeatedly from internal testing and feedback, but which we hadn’t had figured out the solution for yet by the time the Trade dev diary was written.

These issues were that first, managing the precise level of your trade routes was far too micro-intensive, and second, that Tariffs didn’t function as an effective trade barrier. These weren’t the *only* issues mind, but they were the two big ones that we needed to design some sort of solution for. Well, design and implement a solution we did, so here I am to tell you all about it.

So then, what has changed about trade? Well first of all, let’s go over what hasn’t changed. Namely, that trade routes are still established by a nation, from their market to another market, and can be either an import route (which creates buy orders in the foreign market and sell orders in your own market) or an export route (which does the opposite). Trade Routes also still require Convoys to transport goods along sea routes, and still create Trade Centers whose employees manage and profit from those routes.

Trade Routes are created from the Trade Lens, where you will get both a map and list overview of the most suitable markets to trade with
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As to what has changed, probably the single most important difference is that you no longer directly manage the level of your trade routes. Instead, all newly established trade routes start at level 1, and will grow (or shrink) on a weekly basis based on market conditions. So if you’re playing as Britain and looking to import Wood from Brazil, instead of setting the exact level of Wood imports that makes sense for your needs right away, you simply establish the route and it will grow towards those needs over time. It’s also worth noting in this context that we have removed the national limit on the number of trade routes you can have, and replaced it with a fixed bureaucracy cost per route (which does not increase with route level) instead, to encourage countries to have fewer, more impactful trade routes.

So what are the market conditions that affect whether trade routes grow, shrink, or stay unchanged? Well, the single most important factor is profitability. A trade route makes money by buying goods that are cheap in the exporting market and selling them at a higher price in the importing market, but it isn’t as simple as just looking at the current market price. Instead, each trade route has a purchase price and sale price which are calculated based on the difference between the pre-trade and post-trade price of the goods in the two markets.

To maintain naval trade routes, you will need convoys. If your supply network is under strain due to lack of convoy production or attacks on your shipping lanes, your trade routes will start shrinking over time.
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Confused yet? To try and explain, I’ll use the Wood import route to Britain from Brazil as an example. To get the purchase price in the exporting (Brazilian) market, we first calculate what the price of Wood would be in that market if it had no trade routes exporting or importing wood, i.e. if it was set only from local supply and demand. Let’s make up a number and say that the pre-trade price of Wood in Brazil is 10 (quite a low price) and the post-trade price of Wood in Brazil is 20 (a very average price). To get the purchase price, we simply calculate the midpoint between these two prices, aka 15. This means that we assume that our trade route is paying, on average, £15 for each unit of Wood they are exporting. The same calculation is then done in the British market to get the sale price, which I’m just going to arbitrarily set at £25. From here on, the math should be simple enough - each unit of Wood imported to Britain from Brazil generates £10 in profits for the Trade Center.

There’s a lot of factors that go into whether or a trade route will grow or shrink, but fortunately you don’t have to know them all by heart, since the level prediction tooltip will break them down for you!
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Well, it would be that simple if it weren’t for Tariffs. Tariffs are collected on both ends of the trade route, with the exporting market collecting Export tariffs and the importing market collecting Import tariffs. Under the new system, Tariffs can be a highly effective trade barrier because they are calculated against the base price of the goods rather than the market price. What this means is that if the Import tariff on Wood is 25%, that Import tariff is always going to be £5.

If you have a degree in economics or you’re just surprisingly good at following along with my overcomplicated explanations, you may already have picked up on the reason that setting against the base price makes Tariffs a more effective trade barrier. Namely, that it disproportionately affects high-volume, low-revenue-per-unit routes. For our example Wood route above, a tariff of £5 means a full 50% reduction in profits, and as the route grows and the difference between the purchase and sale price shrinks, tariffs will take away more and more of that profit until it’s simply more profitable for the Pops in the Trade Center to stop growing the trade route level, and indeed may end up reducing the level in order to make more money for themselves.

It’s worth noting that Trade Routes can never shrink below level 1, and so will always trade a small number of goods even if doing so at a loss, so that for instance you can always import a small quantity of weapons or ships needed to kickstart your military or merchant marine - assuming that you’re willing to subsidize the Trade Center if it doesn’t have other, more profitable routes to make up for the losses.

So then, is creating trade routes and letting them do their own thing the only way you interact with trade now? Well, no. Since we’ve taken away the need to adjust routes manually, this means that we can now put emphasis on other, more indirect ways to manipulate the flow of goods between markets. These include strengthening Trade Agreements (which now remove both bureaucracy cost and tariffs from all trade routes between the two countries) and adding the ability to place Embargoes on countries you want to keep out of your market.

Mexico decides that it has had enough of American meddling in their market - it’s Embargo time!
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However, probably the single most important tool we’ve added for controlling trade is Market Good Policies. There are 3 such policies, which you can set separately for each individual good in your market:
  • Protect Domestic Supply: This market good policy removes import tariffs and increases export tariffs, encouraging countries to supply more of this good to your market and discourages them from exporting it away from you, which might be useful if you for instance want to keep the price of Clippers low so that you’ll pay less to maintain your ports.
  • Encourage Exports: As the name pretty much explicitly states, this market good policy removes export tariffs and increases import tariffs, which is highly useful if you for instance want to drive up the price of Furniture so that your Furniture Industries will see increased profits.
  • No Priority: This is the default market good policy, which sets both Import and Export Tariffs at the baseline determined by your Trade laws. To give you a couple examples of what this baseline could be, under Mercantilism you have overall lower export tariffs and higher import tariffs, while Free Trade removes all tariffs altogether.

Well, that’s about all there is to say about the changes to Trade. Overall, we’re quite happy with the changes we’ve made and how much better it feels to play with compared to the old 100% manual system. Join us again next week, where I will cover Achievements!
 
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This comment is reserved by the Community Team for gathering Dev Responses in, for ease of reading.


LucasG21 said:


Trade routes now cost Bureaucracy? Wasn't Influence initially the capacity used for foreign interactions, including trade?

Also, is there any cost to having Market Policies other than No Priority, and is there a cost/time requirement to change them?
There is currently no cost or time required to change.


LucasG21 said:


Trade routes now cost Bureaucracy? Wasn't Influence initially the capacity used for foreign interactions, including trade?

Also, is there any cost to having Market Policies other than No Priority, and is there a cost/time requirement to change them?
Since Influence isn't something you can 'build up' in the same way as Bureaucracy, we didn't want it to act as an effective hard cap on trade routes. I'd be willing to reconsider this if we add a way to produce influence from buildings, though.


FranklyJustNess said:


How are we encouraged to keep export routes outside of trade agreement? I understand they eat the bureaucracy that could go into imports or just governing, but in exchange don't provide much benefit to keeping the economy running smoothly. Is it expected that countries will avoid making those lanes themselves and count on target nations to organize imports of those goods?

And what country has the trade center building for a lane? Always the nation that started the trade, both nations or maybe only the one exporting?
If you're not the one exporting your goods, someone else's Pops are going to be the ones profiting. Trade Centers are only generated in the nation that owns the trade route.



cloudwasher said:


Is there any plans to add a land based equivalent to convoys, or is it still a situation where you need convoys for trade routes over an ocean and nothing needed a la wagons trains etc to transport over land? Are all trade routes over water now? Is there any infrastructure or other requirements for land trade or could for example Russia trade over land with China in 1836 despite clearly not having any infrastructure for transporting the goods across Siberia in any realistic manner?
The current plan is to make it so that land trade is limited by infrastructure, and any volume not supported by the infrastructure will have to be shipped by sea.



Byamarro said:


Are market trade policies being set per good or for the whole market?


But you still get tariffs from trade routes that are flowing inside trade routes not owned by you, right?
Per good, and yes you do.


pizzayolo said:


Are treaties port affected by the new tariffs system?
Treaty ports let you bypass tariffs and embargos.


favourites said:


If with this new system I were to play France, and somehow make my way to conquering every single rubber producing state in the entire world and then embargo Germany, will, in that scenario, Germany simply not have access to rubber, or, at the very least, a minimal enough access to simulate smuggling and whatnot that they are effectively unable to compete with any country able to import rubber when it comes to rubber-reliant goods?

And thank you for the rework, the system does sound much better now than before.

Edit: Also, random question: Is the base price reliance moddable? Are we able to technically change it to use market price if we so desired?
In this case you could ensure Germany has no access to rubber and make them virtuallly unable to use rubber PMs (they would take a massive 50% output penalty)


Freger said:


If you have two countries that both have a level 1 trade route for a good in the same country with the same trade policy and tariffs (so all else being equal) and they both have the potential to expand to a level 2 route, but they can't both do it, how is it decided who gets the route? Or am I misunderstanding it?

And how granular are the different levels compared to how fast they can potentially expand?
They would likely grow to both be about half the level that just the one of them would be.


ashelee1 said:


Do land trade routes create trade centers and if so, where?
Usually in the market capital.


So as a bulk answer to all the questions about the special purchase/sale price: Does it make perfect sense from a realistic standpoint? No. It's there to allow trade to change prices in a way that doesn’t always end up hovering around base price, and to allow countries that specialize in overproducing certain goods to benefit more from exports. We chose gameplay over realism in this case

I will also mention that the first version of this system strictly used market price and it played much worse.

NilsFabian said:


So a landlocked country is at a disadvantage?


Even in wartimes?
So as long as my opponent doesn't manage to occupy my tradeport I can still buy my weapons from him?
Yes and yes. Occupied treaty ports provide no benefit though.
 
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Just have to point out that it's really cool that the dev team still tries to improve on the game's systems based off of community feedback.
 
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It’s also worth noting in this context that we have removed the national limit on the number of trade routes you can have, and replaced it with a fixed bureaucracy cost per route (which does not increase with route level) instead, to encourage countries to have fewer, more impactful trade routes.​

Trade routes now cost Bureaucracy? Wasn't Influence initially the capacity used for foreign interactions, including trade?

Also, is there any cost to having Market Policies other than No Priority, and is there a cost/time requirement to change them?
 
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Good evening,a great dd and i really like the new changes.However,as usual,i have two questions:
-How moddable all of this will be.Can we create new market goods policies or are they hardcoded?
The second question is semi-related to the dd.Since the next week dd will be about achievements,does this mean that we will go more into 'polishing and final' dd after them such as Modding,AI and so on or are there still gameplay mechanics that you haven't talked about yet?
Thanks for any replies about this.
 
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Also to whomever picked dark cyan and orange instead of green and red for the arrows, thank you for picking colorblind safe colors.
 
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Trade routes now cost Bureaucracy? Wasn't Influence initially the capacity used for foreign interactions, including trade?

Also, is there any cost to having Market Policies other than No Priority, and is there a cost/time requirement to change them?
There is currently no cost or time required to change.
 
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So i still need to setup dozens of trade routes for every good i need to import? Or is there a way to automate this? I cannot imagine it beeing fun to manually check for trade every now and then and rearange 10 trade goods i now suddenly need and stop routes I dont need...
 
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Trade routes now cost Bureaucracy? Wasn't Influence initially the capacity used for foreign interactions, including trade?

Also, is there any cost to having Market Policies other than No Priority, and is there a cost/time requirement to change them?
Since Influence isn't something you can 'build up' in the same way as Bureaucracy, we didn't want it to act as an effective hard cap on trade routes. I'd be willing to reconsider this if we add a way to produce influence from buildings, though.
 
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What a fantastic revision to Trade, I love the fact the profitability of the route is now front-and-centre, it makes it a lot clearer as to the actual flow of money throughout the world, and how trader pops actually make their cash. Per-country Embargoes are great to see as well, and I really like the Trade Policies, being able to tweak how individual goods tend to be imported/exported is great, much more of the management side than microing 20 levels of an export route.

Great to see how the dev team is listening to feedback and implementing great revisions!
 
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Absolutely thrilled by the changes, especially the introduction of perhgood market policies!

However, you lost me with in the explanation of how profitability is calculated - namely, what do you mean by pre-trade and post-trade prices, and how are they calculated?
 
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I like your funny words, magic man.
 
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How are we encouraged to keep export routes outside of trade agreement? I understand they eat the bureaucracy that could go into imports or just governing, but in exchange don't provide much benefit to keeping the economy running smoothly. Is it expected that countries will avoid making those lanes themselves and count on target nations to organize imports of those goods?

And what country has the trade center building for a lane? Always the nation that started the trade, both nations or maybe only the one exporting?
 
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Are there any plans on making limited embargos like for special goods?

For example im a neutral party in a war but I dont want one of the sides to import arms from me. I still want to trade the rest as usual with them, I just dont want to give them arms.
 
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How are we encouraged to keep export routes outside of trade agreement? I understand they eat the bureaucracy that could go into imports or just governing, but in exchange don't provide much benefit to keeping the economy running smoothly. Is it expected that countries will avoid making those lanes themselves and count on target nations to organize imports of those goods?

And what country has the trade center building for a lane? Always the nation that started the trade, both nations or maybe only the one exporting?
If you're not the one exporting your goods, someone else's Pops are going to be the ones profiting. Trade Centers are only generated in the nation that owns the trade route.
 
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Will we have a trade goods map to see where the cheapest good is produced so we can establish a trade route there?

Will we be able to help those countries that have natural/political conditions to produce cheaper goods to increase their production for the benefit of our trade centers?

EDIT: is it possible to control the production and price from a foreign nation so trade centers make a profit and the player can claim tariffs too? Maximizing profits for the importing nation while exploiting the exporting nation?
 
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