Exports are what you pay for imports
Consider a Japanese craftsman who makes exquisite furniture. After spending weeks carefully handcrafting a beautiful wooden table, he offers it for sale.
An American spots this masterpiece and desperately wants it for his home, but he doesn't have any Yen. Fortunately, he has something else: dollars!
He approaches the craftsman. "Would you accept these dollars instead of yen?" The craftsman examines the green paper with strange symbols and nods agreement. They exchange their goods.
If we ended our story here, the American would be far better off! He got a magnificent wooden table that will last generations, while the craftsman received nothing but colorful paper. This is the essence of imports: they make a country materially richer, while exports represent what you sacrifice to get those imports.
If the craftsman never trades the green paper, all he will have achieved is becoming one beautiful table poorer. So he travels to America in search of goods and services to purchase.
He wanders through American markets, looking for something of value to him. He finds little that appeals to him. Nothing matches the craftsmanship of what he produces at home. He buys a few small items: some unique American whiskey and designer jeans, but returns home with most of his dollars unspent.
There is now a trade deficit. The American got valuable furniture, handing over paper in return. This deficit is excellent for America and unfortunate for Japan. The American imported more value than he exported, he got the better end of the deal.
The Japanese craftsman stares at his pile of green paper. "Why oh why did I agree to make such a lousy trade?" he laments. "All I got was this worthless green paper, and I gave away my beautiful table!" A thought occurs to him: "Maybe I can find some even greater fool to take all this worthless green paper off my hands!"
Thinking for a while about which part of the world has the greatest density of idiots, he decides on visiting France. Not long into his journey, he finds a French fashion designer eager to take the green paper off his hands in exchange for a fancy designer jacket and beret.
For trade to make sense for a country in surplus, they must eventually use that currency to buy something of value, either from the original country or from someone else.
The French designer is thrilled to get his hands on these dollars. He plans to use them to buy exotic materials from yet another country. But first, he makes a trip to America, where he discovers a small restaurant owned by an immigrant.
The French designer buys a delicious meal and pays with some of his dollars. The immigrant restaurant owner practically snatches the dollars from his hand with unusual enthusiasm.
"Mon Dieu!" exclaims the Frenchman, surprised. "Why are you so happy to take this paper off my hands? It's just paper with strange symbols!"
The immigrant leans in close. "You don't understand. In two months, a violent gang of thugs calling themselves the 'U.S. government' is going to demand I pay tribute, and the tribute must be made in the form of this special green paper they themselves produce and call 'dollars'. If I cannot conjure up a sufficient amount of their green paper the violent thugs will force me out of my restaurant and lock me in a cage for something they call tax evasion.
People value fiat currencies because they pay taxes in that currency corresponding to some percentage of the value of goods and services they sell.
Zooming out to view the entire system, it all adds up. The American got a beautiful table. The Japanese craftsman got a designer jacket and beret. The French designer got a delicious meal. And the immigrant got protection from government thugs. Everyone got something they valued, and the dollars just kept moving around.
What matters isn't any individual trade deficit, but whether the overall exchange of exports for imports creates genuine value for your economy in the long run.
If a country consistently imports more than it exports and offers nothing valuable in return except its currency, it should ask: Why are these foreigners so eager to give me more than I give in return? Why are they such suckers?
The answer is usually that you have nothing valuable to export NOW, but these foreigners expect your currency to be valuable LATER. If you don't start producing something of value to export, soon you'll find yourself unable to import. Because only a fool would give up their valuable goods and expect nothing in return. Eventually, those foreigners will realize they've been had.
People get confused about trade and currency. They think of money as something with objective value, as if paper with numbers on it is valuable in of itself. But money is just another type of good - one that happens to be accepted widely because governments demand it for taxes and people believe other people will accept it.
When a country keeps handing out this paper in exchange for real valuable goods without producing anything valuable in return, it's living on borrowed time. The other countries aren't idiots forever. Eventually, they start wondering why they're breaking their backs to produce real stuff in exchange for fancy paper that buys less and less each year.
That's when the trade deficit finally catches up with you. If you find yourself importing more of value than you export, you’ll soon find yourself unable to import. But what matters is the total balance of exports and imports of a country, not the balance between any two countries. It is fine for Japan to sell its goods to the United States, even if they get nothing but currency in return. They can sell that currency to someone else who does value stuff produced in America.