Under the control of Viceroy Nute Gunray, the Trade Federation followed the advice of Darth Sidious to blockade the planet Naboo as a protest against trade taxation laws imposed by the Senate. Sidious later instructed the Viceroy to invade Naboo, although the potential advantage for the Trade Federation wasn't clear. Although the invasion was initially successful, the Trade Federation's occupation force soon suffered an embarrassing defeat by Naboo's tiny military, lead by their 14-year-old ruler, Queen Amidala.
Nute Gunray managed to escape prosecution and lead the Trade Federation to join a Separatist movement that fought a civil war -- known as the Clone Wars -- against the Galactic Republic. The Separatists eventually lost the war, and the Trade Federation was effectively destroyed.
Little is known about the internal workings of the Trade Federation. Since the Trade Federation is actually an interstellar shipping corporation, the position of Viceroy may be equivalent to a corporate CEO or President. The leadership appears to consist primarily of Neimoidians.
The Federation had a large navy of refitted cargo ships and an army composed almost entirely of combat droids. Droids and vehicles in the Trade Federation army include the following:
- B1 Battle droids
- Armored Assault Tanks (AAT)
- Multi-Troop Transports (MTT)
- Single Trooper Aerial Platforms (STAP)
- Troop Sleds
The Trade Federation was able to deploy a fleet of armed starships capable of blockading all traffic to and from the planet Naboo and field an army of droids capable of seizing control of the planet, but Naboo is a sparsely populated planet with minimal military assets. Their droid armies, and fleets of ships, do in fact suffer from a number of glaring weaknesses, but this is understandable when one realizes that the Trade Federation, being a business, would not expect to have to fight an enemy with a fully fledged army. Their expected enemies would be pirates, terrorists, and hostile primitives, which the military they had would be sufficient to deal with.
They were a major member of the Confederacy of Independent Systems. They apparently have the resources of multiple planets at their disposal. On their own, they proved to be militarily inept, but as part of a coalition led by Count Dooku and General Grievous, they represented a significant threat to the Galactic Republic.