Exchange for something of lower value or price, as in They bought a smaller boat, trading down for the sake of economy. Similarly, trade up means "make an exchange for something of higher value or price," as in They traded up to a larger house. [First half of 1900s]
To trade something for something else of lower value or price: My SUV used a lot of gas, so I traded it down for a smaller, more economical car. My parents traded down their house for a condominium in Arizona.