Coming from Senior product manager Tatsuo Nomura...
“[Trading] won’t be through the internet. You shouldn’t be able to exchange your Pokémon with someone who is 100 miles away from you. ... The person needs to be in your proximity.
I wasn’t really thinking of trading as a way to solve the local area spawn issue. That was more, we have a couple Pokémon that only spawn in a couple regions, and that was the hope, that some Pokémon you have to know someone or find someone who lives in certain regions and meet and exchange. We don’t want to just have that be an online game that you can just exchange virtually.
The last couple of months, we updated our data set so that hiking trails that are more often found in local areas have more Pokémon. We’re still trying to come up with an answer [to trading] that makes sense so it doesn’t kill the gam. If we fail this, we can easily kill the game.”
from GoNintendo

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