Don't confuse trade deficit with industrial production. The US produces a very healthy amount of industrial products, especially high-end specialized machines.
Here's an excellent article that talks about what a deficit is, and is not:
What Is the Trade Deficit?
It’s not a scorecard, and reducing it won’t necessarily be good for jobs.
NY Times The Upshot by Neil Irwin, June 9, 2018
Full article:
https://www.nytimes.com/2018/06/09/upshot/what-is-the-trade-deficit.html
In this accounting, the $69 billion United States trade deficit with Mexico or $336 billion gap with China is something of a scorecard reflecting diminishing American greatness.
The vast majority of economists view it differently. In this mainstream view, trade deficits are not inherently good or bad. They can be either, depending on circumstances.
....Trying to eliminate the trade deficit could mean giving up some of the key levers of power that allow the United States to get its way in international politics. The reasons have to do with the global reserve currency, economic diplomacy and something called the Triffin dilemma.
....
Wouldn’t it be better if the U.S. didn’t run a deficit?
It’s not clear that that’s even an option, because the dollar isn’t used just in trade between the United States and other countries.
The dollar is a global reserve currency, meaning that it is used around the world in transactions that have nothing to do with the United States. When a Malaysian company does business with a German company, in many cases it will do business in dollars; when wealthy people in Dubai or Singapore’s government investment fund want to sock away money, they do so in large part in dollar assets.
That creates upward pressure on the dollar for reasons unrelated to trade flows between the United States and its partners. That, in turn, makes the dollar stronger — and American exporters less competitive — than they would be in a world where nobody used the dollar for anything except commerce involving the United States.
The roughly $500 billion trade deficit that the United States runs each year isn’t just about poorly negotiated trade deals and currency manipulation by this or that country. It’s also, to some degree, a byproduct of the central role the United States plays in the global financial system.
.....
If having the global reserve currency means bleeding jobs overseas, why keep it?
Be careful what you wish for.
There’s no doubt that maintaining the global reserve currency creates costs for the United States, namely a less competitive export industry.
But
it also creates a lot of advantages. Lower interest rates and higher stock prices are among them (though they have the downside of also feeding debt-driven booms and busts). Even more important is what the dollar’s prominence in global finance does for America’s place in the world.
It helps ensure that the United States can afford to finance wars, and
it gives the government greater ability to fight recessions and panics. A country experiencing a banking panic will see money sent out of the country, causing its currency to fall and its interest rates to rise. All that limits a government’s options for fixing the problem. In 2008, when the United States experienced a near collapse of the banking system, the opposite happened.
The centrality of the dollar to global finance gives the United States power on the global stage that no other country can match. It has enforced sanctions on Iran, Russia, North Korea and terrorist groups with the implicit threat of cutting off access to the dollar payments system for any bank in the world that does not cooperate with American foreign policy.
Part of what makes the United States powerful is the great importance of the dollar to global finance. And part of the price the United States pays for that status is a stronger currency and higher trade deficits than would be the case otherwise. "
