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2. The smithy doesn't actually produce any weapons. It produces Tools. If it's not making money, try sending the output to Warehouse, then pick them up and sell them elsewhere.
3. Caravan doesn't do ♥♥♥♥ for you.
The low value tradegoods are less profitable usually. In my current run i have workshops for jewels, velvet, linen, oil and pottery in various cities that get the coresponding raw material from their villages and they all generate 150-200 per day. The cities are all in vlandia and meanwhile i've also become a vassal lord of that kingdom. Vlandia is a safe bet since they are stronger and less exposed than their neighbors so their cities and villages almost never lose prosperity.
Where is it?
What are the Trade Bound villages supplying?
You may have to do as I mentioned in my first response -- Send the output to Warehouse, then find where the market is and sell it yourself.
(Note: You will get Trade experience for sending workshop output to the Warehouse.)