How are markets going to figure anything out with tariffs changing every day, depending on the mood of dear leader?

Countries that believe that are dominated by those who plan.

It's a principle of capitalism, but taken to the extreme, it's just a strawman. At this point, I think we are pretty sure that some interventions make capitalism better.

This post is specifically about Industrial Policy: https://en.wikipedia.org/wiki/Industrial_policy

But other effective interventions are anti-trust and demand-inducing regulation (e.g. people want to fly because they know it's safe).

No, of course not. That's oversimplifying to the point of idiocy.

Markets do not mean that an Industrial strategy / Industrial policy is not needed.

Markets respond to incentives created by such a strategy.

The free market (which I think people also include in capitalism) would correctly predict labour intensive jobs would be outsourced. This is very much a feature (comparative advantage), not a bug. I realized a lot of supposedly free market people don't even know the basics of it. Politically the free market has become an identity associated with national greatness and a sense of control of ones destiny. The dominant feeling seems to be if you have a free market, you will win everything (which is actually opposite from the truth).

That's what we did, and it moved everything to China.

The point of Capitalism is Marx needed a straw man to tear down. The world has never seen what he envisioned.

What you might call capitalists very much plan. They don't believe in central planning where one "guy" makes a plans and everyone else implements them, but they do plan.

I'm sure that the capitalists would disagree in this instance.

Capitalism as such went out the window with tariffs.