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Start by thinking why US labor is so expensive. Why are living costs so expensive. Why are products priced differently in different countries despite being the same product (eg a bottle of Coke or a Big Mac).

Inflating your labor costs through minimum wages and regulations that now to unions just means your input costs increase which will be passed on in product prices (or fewer businesses able to serve the market which means fewer employment opportunities). This is shooting yourself in the foot or cutting off your nose to spite your face.

Putting on tariffs on top of this price structure further limits your purchasing ability because you've just increased costs for yourself as you no longer have access to a cheaper foreign product.

And it's not just about labor costs, too. Labor is only one input cost. Think about land costs, energy costs and everything else that western countries have found a way to increase for themselves through various taxes and regulations. Other countries don't do that and their output is cheaper.

Denying yourself the ability to buy a oridct at the cheapest price possible (through tariffs, taxes and regulations) is really the dumbest thing imaginable.

If it costs me $20 to manufacture a clock but my neighbor can do it for $5, am I really COMPETING with him by arbitrarily forcing my neighbor to spend $20 as well? This just creates an artificial burden on him which the consumer will ultimately absorb. It doesn’t actually help me as a fellow producer. It leads to Americans wasting a lot more money than they really need to on clocks.

In your example, you started with one inefficient market — the United States.

You then posed the idea of creating a second inefficient market in China. Are two bad markets better than one? I say instead of making their market less free, we should move ours closer to freedom.

I work in software/IT. Generally you outsource your non-differentiating work that requires "solved" problems and use your onshore resources for high-impact work that requires innovation or other differentiating factors

 how can US companies compete.

Question your unstated assumption here - why do you think we should compete?

HINT: We shouldn't. 

Really. 

Now what ?

See where that leads you ...

US Workers should not compete for those jobs. First get rid of the mindset that there are only so may jobs and industries. New jobs and fields are being created every day. You want to move up the earning stack not downwards.

Globally speaking the reason why those jobs can be paid 0.50 a day is because the consumer’s valuation of the products that these people make is extremely low. You as Americans (and me as a Brit) want to be making products and services which consumers value more highly.

Back in the 1950s and 1960s European industry recovered from WW2 and was, relatively, brand new and in competition with USA workers.

Europeans were willing to work for very significantly less then American workers.

Companies like Boeing competed directly head to head with the best that Europe had to offer. Boeing jets were significantly more expensive then their European counterparts.

Yet Boeing completely dominated the market with their designs like the 727.

Why?

Because air carriers could not afford to NOT buy them. They were significantly more efficient, cheaper to operate, faster, operated from more airstrips, and cheaper to maintain, etc etc.

That is how you compete.

Tariffs don't accomplish anything resembling that.

I suggest listening to Bob Murphy's podcast: The Human Action Podcast.

But in the meantime, as others have said: Countries go through different phases and have different resources, both of which dictate what kind of labor is worthwhile and in demand. An undeveloped country is going to have mostly physical labor and low complexity work. Then it progresses into factories and the like, with more complexity, things that require some infrastructure. Then there's countries like the US, where the majority of jobs are service related, and most of the "menial" work is outsourced.

It's called comparative advantage, where you compare what kind of work is most efficiently allocated resources from one country to another. You wouldn't call up Somalia to build a 747 or provide financial planning services, just as you wouldn't call up "the average" American to go work the mines (yes some exist, but you know what I mean) or harvest mangoes.

Now, how does the US measure up to countries in a similar position? That has to do with regulation and other government interventions. Not only can these things make labor more expensive, but they make the cost of living more expensive, like home prices, which increases the necessary wages required to make a job worthwhile, compared to staying home and collecting welfare.

I'm not an expert, this was just my take. I definitely think you should seek out other resources for knowledge. I would also recommend Basic Economics by Thomas Sowell. He writes in an easy to understand fashion versus some other economists, like Mises. Bob Murphy has books out too, but I haven't gotten around to reading them yet; I really enjoy his podcast.

Let them work for 50 Cents an hour and buy the stuff. They have many disadvantages anyway, like having to ship stuff half way around the world which costs big money and takes months.
Do stuff they can't, and sell that back to them (once they make enough money to buy it).

David Ricardo's theory of comparative advantage is a very difficult topic to understand, but it's critically important to the concept you are trying to grasp. I am not going to explain it because there are literally entire books on the topic, but if you wanna know why tariffs are, at best, a necessary evil that could maybe be justified only in the most extreme cases of national security interests, then you need to start right there.

"That it is logically true need not be argued before a mathematician; that it is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them."

• Paul Samuelson responding with the concept of comparative advantage to Teller Ulam's argument that every thesis the social sciences have postulated is either trivial or obvious