Why might at trade deficit be a good thing for a country?

For decades, the U.S. has run a deficit in the trade of goods — in other words, importing more goods than it exports. The dominant narrative is that the steadily increasing U.S. “trade deficit” is a function of two things: (1) the availability of cheaper labor overseas and (2) the unbridled consumption habits of Americans. As a consequence, the narrative goes, the U.S. has had to import increasing amounts of capital from investments by foreign governments, businesses, and individuals to “fund the trade deficit,” thus becoming a debtor nation.

Although this is a compelling narrative, there is in fact no evidence to support the conclusion that a deficit in traded goods causes a net import of capital.

Trade Deficit Can Be a Sign of a Healthy Economy. Trade deficit might not matter if the country's economy is large enough. For example the U.S. has operated at a Trade deficit with out much negative impact. All of this is highly debated.

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