Cartoon- In the state of Chihuahua in Mexico, an eatery is churning out Donald Trump tacos. Masks of Mr. Trump’s face, topped by tufts of artificial blond hair, are rolling off the lines at a factory in Cuernavaca — a recent batch numbered 10,000.
Wall Street traders have developed a biting new acronym for a strategy that’s become surprisingly lucrative for President Donald Trump’s whiplash-inducing trade policy: TACO – “Trump Always Chickens Out.”
Reportedly first coined by Financial Times columnist Robert Armstrong, the term has quickly gained traction among investors who are profiting from what they say is a predictable pattern: Trump threatens steep tariffs, the markets plunge, and days later he backs off in a way that prompts a rebound.
The latest example came over the weekend. On Friday, Trump sent markets reeling by announcing sweeping 50% tariffs on European imports. But by Sunday, the White House abruptly paused the move, citing a fresh round of trade talks. When the markets reopened on Tuesday, stocks surged.
The TACO trade strategy is reportedly being openly embraced by some investors, according to the New York Post.
“Once he delivers bad news, investors are buying those stocks when they are beaten down waiting for him to chicken out and watching those stocks rebound in value,” said Ted Jenkin, president of Exit Stage Left Advisors, in an interview with the outlet.
Economists say this type of market behavior, explicitly betting against a sitting president’s follow-through, is unprecedented.
University of Michigan economist Justin Wolfers told Barron’s on Tuesday that “there was no BACO trade” – referring to former President Joe Biden – and “no CACO trade” referring to former President Bill Clinton.
“It was always taken as a given that when the president spoke on Monday, he would likely still mean it on Tuesday,” he added. “That’s no longer true. But what’s really hard is that it’s not even obvious when it’ll be true, and when it won’t be. Madness.”
President Trump on Wednesday bristled when asked about a new Wall Street term based on his tendency to reverse his tariff threats, defending his approach and dismissing the question as “nasty.”
A reporter asked Trump in the Oval Office about what was dubbed by a Financial Times columnist as the “TACO” trade, an acronym that stands for “Trump Always Chickens Out.”
“I’ve never heard that. You mean because I reduced China from 145 percent that I set down to 100, and then down to another number, and I said you have to open up your whole country?” Trump said. “And because I gave the European Union a 50 percent tariff and they called up and said, ‘Please let’s meet right now.’”
“You call that chickening out?” Trump said.
The president touted the trillions of dollars in investments pledged by Middle Eastern countries during his recent trip there and defended his whiplash approach to tariffs as an effective negotiating tool.
“But don’t ever say what you said,” Trump told the reporter. “That’s a nasty question. To me, that’s the nastiest question.”
Trump has repeatedly threatened tariffs in recent months, only to pull back days later. He initially threatened tariffs on Mexico and Canada in early February, but ultimately delayed imposing them.
Trump imposed sweeping “reciprocal” tariffs on dozens of nations on April 2, but one week later announced there would be a 90-day reprieve where the tariffs were lowered to 10 percent.
More recently, he said last week he would impose a 50 percent tariff on the European Union starting in June. But days later, he announced he would delay those tariffs until July 9 while the two sides held talks.
Administration officials have framed the approach as a way to bring other countries to the negotiating table. But with the “TACO” trade, investors have started to expect the president to ultimately back off some of his most significant threats.
The media/ the Hill