If you want to see why adjusting the balance of trade will be a painful task for the US, it’s worth reading this generally upbeat article about the revival of the port of New York, thanks to imports from Asia. The money quote, several pages in
After unloading 1,120 containers from the [Hyundai] Glory, the longshoremen reloaded the ship for the return trip. Of 667 containers to be sent back, 419 were empty, being returned to Asia to carry more goods back to the United States. Of the rest, most were stuffed with two of New York’s biggest exports: wastepaper and scrap metal.
Even on the most generous interpretation of comparative advantage, I don’t think returning packaging material and scrap to your suppliers can form a sustainable basis for trade.
UpdateA comparison with Australia. The picture at container ports here is much the same, which is one reason I always found the focus on improving waterfront efficiency so odd. I’m not a mercantilist, but it doesn’t seem to me that, for a chronic deficit country, our top economic priority ought to be improving the efficiency with which we import things.
For most of the 1990s, our deficit on manufactures (which mostly come in containers) was pretty much offset by surpluses in agriculture (shipped in bulk carriers) and some services like education and tourism. So, we had a roughly sustainable position, with trade in balance. The current account deficit reflected payments to foreign capital and was broadly consistent with a stable ratio of foreign debt and equity to GDP.
In the last few years, however, our manufacturing exports have fallen in a hole, while imports have boomed, producing large and unsustainable trade deficits again (though not as bad as the US). The growing CAD has mainly financed investment in housing, as far as I can see, which is not a good sign as housing services are mostly not tradeable.