Why does the U.S. always run a trade deficit?

Is there data that backs up this claim? Is this broadly the case? Cause I do know that local brands have been taking over foreign brands recently. Take for example Apple— sales in China plunged 50%, and reports are pointing at Huawei [1], which amongst other things has been making some impressive high-end phones. Tesla is falling to Chinese brands too [2].

Moreover, foreign brand != foreign product. Tesla manufactures in China, as does Apple, Louis Vuitton, etc.

But regardless of specific examples, I'd imagine the vast majority of consumption in China isn't products of foreign origin given its massive trade surplus [3] and just how much of what it imports are materials, rather than finished consumer goods [4].

[1]: https://www.asiafinancial.com/apple-sales-in-china-plunge-50...

[2]: https://carnewschina.com/2025/05/12/teslas-sales-in-china-do...

[3]: https://tradingeconomics.com/china/balance-of-trade

[4]: https://oec.world/en/profile/country/chn?selector343id=Impor...

Note that I'm strictly discussing this topic using words in the way you'd find them defined in a reputable dictionary or a high school economics book.

But when we compare China to other countries, we do have to consider some unique factors. The cost of living in China is really low, which means that even if people have similar income levels to places like Thailand, their actual quality of life can be better in some ways. For example, China’s “vegetable basket project” keeps food prices super low across the country. There’s no property tax, firefighting services are free, and rural healthcare is cheap—even if it's not on par with what you'd get in big cities.

That said, the government still needs to do more to boost domestic consumption. The current setup is okay, but it’s still nowhere near the living standards in developed countries.

The history of this is long, going back to the 19th century, but it became a major diplomatic tool after WW2. As the US sought to secure allies after WW2, it used the incredible wealth of its population as a carrot to gain and ensure compliance of foreign nations. Japan is an obvious example: the recovery and prosperity of Japan was the direct result of deliberately utilizing the US domestic market to create demand for Japanese products. The result is well understood today: Japan thrived as it claimed enormous shares of US electronic, automotive, machine tool, and other sectors of the US economy, and the US secured a strategic ally in the Western pacific, where it has hosted vast military resources for going on 75 years now.

This practice has continued unabated ever since, with Trump being effectively the only significant impediment to have ever emerged. In the 1990s the rationale for MFN status for China was "human rights." China was expected to comport with some notion of human rights and, in turn, China would join the long list of MFN status nations. Again, trade with the US as a diplomatic reward for some US prerogative.

All of this is incentivized by the fact that, aside from approval from the US Senate, the US president has the exclusive prerogative to negotiate trade deals with little to no limits on the terms. The president can do this without passing any bills in Congress, allocating any budgets, winning any court battles, etc. Just negotiate a trade deal, get it approved by the Senate, and shazam: you've changed the world. This is further incentivized by "fast track" authority for the executive, which has been US law since 1975.

Finally, this is all lubricated by the ability to ship vast quantities of cargo from distant locales at low cost. This part really spun up in the 1960's with the US driven standardization of containerization. With this affordance in hand, it became feasible to leverage low cost foreign resources on a large scale, and US captains of industry now had a solution to relieve themselves of high costs in the US: labor costs, regulatory costs, taxes, etc.

With industry and government fully aligned based on independent interests, the trend became the dominant factor of global economics: the world literally runs on US trade deficits.

This has been a one way street for coming up on a hundred years now. It isn't terribly surprising that the pendulum is, if not yet swinging back, at least slowing its present direction. I suspect this part might be hard to understand for those that frequent a site like HN, but the bottomless well of US wealth is basically gone now: much of the population of the US lives a sort of high tech subsistence lifestyle, and it's not difficult to imagine the day when their access to credit will effectively stop. That will happen in parallel with the collapse of government finance in the US, which basically creates a new benchmark for the concept of "clown world" with every passing day.

So there is a hard expiration date coming for all of this.