Border trade, in general, refers to the flow of goods and services across the international borders between jurisdictions. In this sense, it is a part of normal legal trade that flows through standard export/import frameworks of nations.
By definition: The buying and selling of goods and services between businesses in neighboring countries, with the seller being in one country and the buyer in the other country, for example, a company in the United States selling to a company in Canada. Also called CBT, international trade, and international selling.
Where border trade is done for tax evasion it forms part of the underground economy of both jurisdictions.
In Europe, residents of Switzerland and Liechtenstein who are non-EU residents can purchase many items in nearby Germany from anything from two to seven times the price they would pay for the same products in their own countries. Austria is also somewhat cheaper than Switzerland. Residents of Switzerland usually qualify for a tax refund on purchases made in all of the surrounding EU countries making cross border shopping even more attractive, particularly in Germany where there is no minimum-purchase requirement for claiming the tax back.
Between U.S. States
Although not crossing a national boundary, residents of one state may often travel across a state line in order to shop for a variety of goods. In some cases, a larger city or metro area in one state may draw a population in from another state. In other cases, residents may take advantage of more friendly legislation regarding restricted products, such as alcohol, tobacco, fireworks, firearms, gambling, etc. For example, a New York City resident may engage in illicit cigarette trade by purchasing products in a nearby state with lower taxes and re-selling them illegally in New York. Furthermore, states which have legalized recreational marijuana may experience a high-amount of out-of-state customers.