Using the threat of tariffs to pressure the Chinese to revalue their currency.
Matt Yglesias considers the politics, don’t forget Dan Drezner either. Brad DeLong offers the full economic analysis. The bottom line is a bit difficult to parse from Brad’s lengthy post, but I’ll offer my summary.
The Chinese (and other foreigners) are offering a massive subsidy to current levels of U.S. federal spending. It happens to coincide with their desire to subsidize their exporters. A low renminbi implies high Chinese exports, high dollar reserve accumulation in China, and relatively low interest rates in the U.S.. Forcing this picture to end overnight would run a significant risk of plummeting U.S. asset prices and a run on the dollar. In the longer run the not-really-stable Chinese currency might end up whipsawed by international capital markets (Indonesia? Thailand? Argentina?).
I’ll make all the concessions here you want. The current Chinese arrangement is screwy and harms the Chinese citizenry. I don’t usually favor fixed exchange rates or export subsidies, implicit or explicit. Somehow, sometime, someway, the Chinese should look toward another policy. I’ll make those concessions until they are coming out of my ears. But I still won’t favor dropping a lit match on an open field of gasoline, which is what this American pressure would amount to. Nor does it matter whether or not you "trust the Chinese," whatever that might mean. This is not the right way to deal with them, and yes it will remind them of the Opium Wars.