Many people are opposed to Niantic implementing trading due to the underground marketplace it would create - allowing spoofers and botters to sell Pokemon at a premium. Niantic recognizes this and Niantic senior product manager Tatsuo Nomura has shared that “Trading won’t be through the internet,” Further saying “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.” While any trading system can create an underground selling market, in person trading makes it much more difficult.

Some Options: (some I likely missed)

• local wifi
• usb
• bluetooth
• NFC - Near Field Communication (The tech that allows for apply pay, android pay and for other "tap to connect" systems.)

Early reports suggested that Niantic would be going the NFC route but some users have their doubts - stating the following:

• Not all Android devices have NFC - however many do.
• NFC is not available for developers on iOS until iOS 11 arrives later this year. When released, will only support iPhone SE, iPhone 6 and newer.
• Excluding users that do not have phones with NFC would create an uproar, bad press and see users leave the game in droves.

Alternatively the other options could be engineered to work, but require a lot more work.

• USB is an option and would create an accessory market of Lightning, MicroUSB, Type C, etc trading cables/adapters. However, this could cause a lot more security issues than NFC.
• Local Wifi is also an option where users have to be on the same WiFi network - Niantic could also use their partnership with starbucks, sprint etc and say that trading can only occur on their wifi networks. Rural players would be pissed I imagine and infrastructure is not available in every country.
• Bluetooth is another option - however, with paring process, could create a security liability and infect devices.

I only see Niantic going the NFC route, but I could be wrong, what are your thoughts?

Update: One solution mentioned that seems to have support and traction is the introduction of a device, such as a Pokémon GO Plus 2 that would be a solution for NFC-less phones. The Pokemon Go Plus 2 would be a bluetooth device with an NFC chip. Implementation would require that at least one trainer would have NFC or that both phones would be able to use some Bluetooth to NFC accessory such as another Pokemon Go Plus 2.