This is completely backwards. There is a trade deficit with China, not a trade surplus, and the result of that deficit is lost private income which increases the U.S. government deficit as we then pay more benefits to the displaced workers. So trade deficits create budget deficits.
Second, it is impossible for a foreign nation to "fund" the U.S., which is a currency issuer. Rather, because we have open capital markets, we allow foreigners to purchase U.S. assets -- something that most other nations don't allow, including China. What this means is that there is a demand for dollars other than the trade demand, but an asset demand. This allows trade deficits to occur.
If you want to stop trade deficits, then don't impose tariffs, but do what China does and ban capital inflows. With no foreign capital inflows, there are no trade deficits -- the golden rule of international trade is that the changes to the capital account plus the changes to the current account must equal 0. No change to one implies no changes to the other, as a mathematical identity.
The way to understand this mathematical relationship is that when the rest of the world sells a good to the U.S., it gets a dollar, and now it has a choice of using that dollar to buy an asset or using it to buy a good. If it is very hard to buy assets, then you buy a good. In this way, the exchange rate adjusts so that the rest of the world doesn't have a trade deficit or surplus.
The reason why you want balanced trade is that when the foreigner gets a dollar by selling a good, but doesn't spend the dollar on buying an american good, then american economy has 1 dollar less income and it needs to sell off $1 of an asset. Selling assets does not produce income but selling goods does produce income. This is why nations like China basically ban selling assets to foreigners and so it's impossible for them to have trade deficits. There are very few nations that have the open capital markets of the U.S. -- really no nation, and our unique policies on capital are why we have such a uniquely large trade deficit.
Second, it is impossible for a foreign nation to "fund" the U.S., which is a currency issuer. Rather, because we have open capital markets, we allow foreigners to purchase U.S. assets -- something that most other nations don't allow, including China. What this means is that there is a demand for dollars other than the trade demand, but an asset demand. This allows trade deficits to occur.
If you want to stop trade deficits, then don't impose tariffs, but do what China does and ban capital inflows. With no foreign capital inflows, there are no trade deficits -- the golden rule of international trade is that the changes to the capital account plus the changes to the current account must equal 0. No change to one implies no changes to the other, as a mathematical identity.
The way to understand this mathematical relationship is that when the rest of the world sells a good to the U.S., it gets a dollar, and now it has a choice of using that dollar to buy an asset or using it to buy a good. If it is very hard to buy assets, then you buy a good. In this way, the exchange rate adjusts so that the rest of the world doesn't have a trade deficit or surplus.
The reason why you want balanced trade is that when the foreigner gets a dollar by selling a good, but doesn't spend the dollar on buying an american good, then american economy has 1 dollar less income and it needs to sell off $1 of an asset. Selling assets does not produce income but selling goods does produce income. This is why nations like China basically ban selling assets to foreigners and so it's impossible for them to have trade deficits. There are very few nations that have the open capital markets of the U.S. -- really no nation, and our unique policies on capital are why we have such a uniquely large trade deficit.