well, there's two reasons i think. first, people want stuff cheap, and china understands that western psychology and exploits that by selling below cost in many cases for their own military/strategic reasons, not economic.
the other is our own fault - american manufacturers don't want to make a mere profit, they want to make an absolute killing. example: 60-odd years ago, the "bic" ballpoint pen hit the market - from argentina of all places. unlike its american counterparts that were selling for $10+ dollars a piece, a LOT of money at that time, bic sold theirs for cents. they controlled manufacture, they controlled costs, and they undercut everybody else. by huge margins. and they never tried to make a killing, just a good healthy profit. here we are all these decades later, and bic is still just about the largest and most ubiquitous global producer, and all gloss and marketing aside, still make the best. and you've never even heard of those "get rich quick" domestics.