President Donald Trump’s repeated tariff remarks and subsequent withdrawals are becoming a kind of investment strategy on Wall Street. Investors are mocking it with a brutal four-letter code word: TACO. TACO stands for “Trump Always Chickens Out.” It refers to Trump’s habit of threatening high tariffs on trading partners, then backing down after negotiations.
Robert Armstrong, a columnist for the Financial Times, coined the term “Taco Trade.” It satirically captures how Trump initially imposes tariffs, then retracts them, often saying he had a positive phone call with the other country’s leader. For example, Trump recently threatened a 50% tariff on EU products. The market dropped significantly.
But it surged again when Trump hinted at possible negotiations with EU Commission President Ursula von der Leyen. He cited a good phone call and likely discussions by early July. On May 27, the Dow Jones, S&P 500, and Nasdaq all saw notable gains.
They rose 1.78%, 2.05%, and 2.47% respectively.
Taco Trade sways investor decisions
The market has responded similarly to Trump’s tariff threats against China.
Analysts say these recurring statements from Trump are not just political rhetoric. They are actionable variables in market behavior. Understanding and capitalizing on these predictable reactions can be a profitable strategy for investors.
The “Taco Trade” highlights the often unpredictable nature of Trump’s trade policies. His sudden changes have caused confusion both domestically and internationally. Critics argue such unpredictability damages the credibility of U.S. economic policy on the global stage.
As global investors and everyday Americans watch closely, one thing seems certain. The erratic nature of Trump’s presidency continues to keep both allies and critics on their toes. Where he goes next with tariffs is anyone’s guess.