Now, under a paper-currency, WITHOUT any manipulation, when US keeps buying alot of Chinese goods, it'd cause Yuan to rise against dollar & over time, Chinese would find US products cheaper & US would find Chinese products costlier & then market equilibrium will go back & forth like that.
But in real life, China either buys dollars or devalues their currency in order to NOT allow it to rise against the dollar. But this does NOT have any negative effect on US. WHY? Well, when US buys from China, it gets cheap goods which enhance Americans' living standards while it gets US dollars in return. Of course, it doesn't allow its currency to rise but that only hurts the purchasing-power of Chinese people BUT those dollars get reinvested in US one way or another which helps create jobs & goods/services in US & the additional income that is generated out of it is what allows Americans to buy more Chinese goods so it's essentially a win-win situation for BOTH countries (except the Chinese people, of course but they too benefit to a degree anyway) so they're essentially keeping their people poor through tariffs & currency-manipulation to provide US with cheaper goods, not a bad situation to be in for the US.
Now, what'll happen if we adopt protectionism & put up tariffs? Well, it'll obviously mean an end to cheaper goods as well as MORE of our capital will be used up for LESS goods because our workers will've to be paid much higher wages because of minium-wage laws & everything so MORE of our capital will be engaged in production of LESS goods which obviously means much higher prices AND it also means that that ADDITIONAL CAPITAL that'll be needed will be sucked out from other areas of the economy which means you'll've MORE job-losses & drop in production & higher prices in those areas.
Now, interventionists mostly see the economy as a static model & that's why they think that they can meddle in one area of the economy & not affect others but that's not how the real-world economies work; in fact, they're very dynamic so every time you meddle in one area, it causes all others to re-adjust accordingly & that's why central-planning is so difficult to engage in because of the dynamic nature of economies.
So because of economy's dynamic nature, even if prices increase in one area, it causes all the other prices to re-adjust according their new supply/demand factors. Because as prices initially rise even in an area of the economy, people bearing those high prices demand higher incomes to ensure their prosperity & higher-skilled people have the most bargaining power because their skills are in shorter supply than lower-skilled people & in order to free up more capital to accommodate higher incomes of higher-skilled people, businesses have to lay off more lower-skilled people which causes more unemployment among the poor low-skilled workers, decrease in production of goods/services AND higher prices of goods/services that the business is producing & so on & so on it causes a "domino effect" throughout the economy. Therefore, prices & unemployment throughout the economy keep having upward pressure, the production keeps having downward pressure UNTIL the market is put back in charge; if not then the economy keeps eating itself. This is how socialism destroys economies & countries, the more socialist the country, the faster it degenerates.
So again, when one raises questions over US unemployment & drop in living standards (reduction in REAL WEALTH ie goods/services) then one must realize that 40% of the US economy is being sucked out every year, plus, there are minimum-wage laws, over-regulation, etc etc & obviously Fed's boom-bust & inflation cycles don't help the economy & unemployment either which are further choking enterpreneurship in the US & that is why US is suffering so unless these resolved or at least significantly ameliorated, US & its economy is likely to continue to spiral downwards, in terms of prosperity, for some time to come. Putting tariffs to "save jobs" is like treating the symptom rather than treating the underlying diseases which is over-regulation, over-taxation, Fed, etc; tariffs WON'T help, they'll cause EVEN MORE unemployment as they'll displace capital & workers in other areas of the economy & cause a "domino effect" of lower goods/services & higher prices & higher unemployment.
The bottomline is that NOBODY can circumvent the markets & in the long-run, it always causes more harm than good.
