How exactly does trade buffing work? And are there any other MP strategies like this?
The basic thing is it means that your allies prioritize trade with you when they need resources, rather than trading with neutral countries or the enemy. This way you get more civ factories.
But in particular, the MP games I play (and most MP games I am aware of) have a rule that you cannot trade for resources that you don't need, solely for the purpose of transferring your civ factories to another country that needs industry more urgently. They also typically have some limits on lend-lease in the rules.
Given this, if it were allowed, the optimal strategy for USA (if you are playing competitively as Allies as a team, and are playing to win) would probably be to trade away literally all of their civ factories to the UK/Soviets, for resources that you don't need.
So instead, while USA is under the Isolation economic law (which does not have penalties for dockyards, but does have penalties for military factories), USA builds only dockyards until they have a large number of docks, and builds basically only capital ships (battleships/carriers/etc) with them. This way, USA has to import large amounts of steel and chromium from the UK or USSR. They can then build more military factories and will stand up better to the Axis. In addition, USA will end up with a very good/unbeatable navy. Not necessarily the ideal navy (ideally you might want some screens), but one that is certainly good enough to secure naval superiority for the Allies.
But even aside from this sort of intentional trade-buffing (from USA), countries like UK and USSR can expect to get a lot of support via trade in MP. Other countries such as Australia, the British Raj, etc will all trade first from UK, and later on will probably switch their trade over to USSR in order to give the Soviets a boost going into Barbarossa.
In 1.3.3., this is pretty much essential to have a balanced game, because the Allied commonwealth minors are nerfed so much, but the Axis minors were not. Previously, we sometimes had rules that e.g. the USA could not build dockyards until the start of the Sino-Japanese war in mid 1937. Perhaps if the new patch nerfs Axis minors with their focus trees, then we might go back to having that rule.