President Trump rattled markets today when he suddenly announced that not only would he seek increased tariffs on steel and aluminum, but that he wants bigger tariffs than his own commerce secretary recommended. Steel and aluminum stocks were up on the news but the overall markets were down – the Dow by about 400 as I type – and the biggest losers were big multinationals who would be devastated by a trade war.

The New York Times is reporting that Gary Cohn, Director of the National Council of Advisors, was overruled by more protectionist voices

Gary D. Cohn, the director of the National Economic Council, had been lobbying for months alongside others, including Defense Secretary Jim Mattis and Rob Porter, the staff secretary who recently resigned under pressure from the White House, to kill, postpone or at least narrow the scope of the measures, people familiar with the discussions said.

But in recent weeks, a group of White House advisers who advocate a tougher posture on trade has been in ascendance, including Robert E. Lighthizer, the country’s top trade negotiator, and Peter Navarro, a trade skeptic and former steel industry lawyer who had been sidelined but is now in line for a promotion.

The tariffs are bad. A trade war would be worse, but at this point seems unlikely. The most troubling possibility is that this means that the relationship between Cohn and Trump is further souring and that he might eventually be resigned or be pushed out in favor of something like Peter Navarro. Cohn has been a clear voice of reason in the administration and Navarro is, for lack of a better word, a nutter.

Such a move would likely lead to short-term chaos in the market and it’s not inconceivable that it could ding the recovery.