Four-Dimensional Chess? | Power Line

After President Trump (of whom, commenters take note, I am a great fan) announced an incoherent and indefensible tariff war against pretty much the whole world, the financial markets tanked. Something like $7 trillion or $8 trillion in paper wealth disappeared. Talk of recession was in the air. Cool heads in the administration soon prevailed, and Trump backed off, announcing a 90-day pause in implementation of his program.

A battle is going on within the administration over trade policy. Peter Navarro represents the view, which Trump has sometimes expressed, that tariffs are good in themselves and should remain in place forever. At its extreme, this is a call for autarky. In recent centuries, no economist has considered autarky to be a sound policy. The Soviet Union was an autarky for a time, and the only autarky in today’s world is North Korea.

Others in the Trump administration consider tariffs a means to an end: announce tariffs, and then negotiate. Not with a view toward turning the U.S. into a self-sufficient island, but rather in order to bring about a fairer, and freer, trade environment. Yesterday the markets surged, because, following Trump’s retrenchment, investors believed that the fair trade advocates in the administration are ascendant.

Yesterday’s stock market rally caused many of Trump’s fans to proclaim that it was another act of genius–four-dimensional chess! Trump planned it this way all along. They viewed yesterday’s rally as vindication of Trump’s tariff plan, rather than in indication of how bad it was: suspending it for 90 days caused the biggest market gain in a long time.

This is the Dow index for the last six months. Taking an action that causes a steep decline, followed by a partial retraction of that action that causes half of the ground that was lost to be made up, is not normally regarded as a coup, let alone a stroke of genius. And, of course, the markets were down sharply again today:

I laughed when I saw this comment on yesterday’s rally by Bill Ackman:

This was brilliantly executed by @realDonaldTrump. Textbook, Art of the Deal.

— Bill Ackman (@BillAckman) April 9, 2025

Ackman is an extremely astute observer. I am pretty sure that by overpraising Trump’s retreat, he was trying to nudge the president in a free/fair trade direction rather than Navarro’s “tariffs forever” philosophy. As are many others, including me.

The ideal scenario is that there is no trade war, except with China. We need to wean ourselves off our dependence on cheap Chinese labor (sometimes, slave labor), if only for national security reasons. Previous administrations have not had the courage to do this. I think Trump does. Decoupling from China will not be painless, and there will be not just market turmoil, but other economic consequences that will affect all Americans. But if you question whether these measures are necessary, read Tom Cotton’s book on the threat that China poses.

Americans will be willing to withstand some pain and inconvenience if it is in service of our national security and our long-term economic well-being. Trump needs to put Navarro and other tariff extremists aside, and make that case to the American people.