Trump encountered a query concerning the "TACO trade" for the first time, which he labelled as the "most distasteful question".
Wall Street has been navigating a tumultuous journey over the past few months, closely following President Donald Trump's unpredictable tariff policies. Recently, investors have learned to react cautiously to the president's tariff threats, a tactic that might involve a sprinkle of skepticism and spice of patience. This new approach is symbolized by the acronym TACO, standing for Trump Always Chickens Out.
Given his tendency to backtrack on tariff threats, it's often not advisable to sell off stocks in a panic triggered by the latest tariff announcement. Instead, the market can anticipate a subsequent relief rally as Trump usually Softens his stance on trade restrictions.
The TACO term was first introduced by Robert Armstrong, a Financial Times commentator, and brought to the president's attention on May 6. According to Trump, his initial tariff rate on Chinese goods was initially set at 145%, which he later reduced to 100% and then to the current 30%.
Last week, Trump alluded to the possible imposition of 50% tariffs on goods from the European Union, starting June 1. This announcement led to a decline in stocks, with the president firming up his stance later in the day, indicating that negotiations were impossible. He ultimately decided to postpone the tariffs until July 9 following promising talks, causing stocks to rebound when trading resumed after Memorial Day.
Trump defended himself when asked about the TACO term during an Oval Office event, stating that negotiations are a part of the process. He also pointed out that setting high tariff rates could help negotiate more favorable terms from other countries.
It's essential to note that the TACO term, while popular on Wall Street and social media, reflects a perspective on President Trump's inconsistent economic policies. Trump has maintained that his unpredictability in trade negotiations is a tactic to secure better deals for the United States.
[1] "Financial Times." Contributed by Robert Armstrong. https://www.ft.com/content/90c1569e-ccf9-4347-af66-f966f9973878[2] "CNBC." Reporter: Mary Cassella. https://www.cnbc.com/2025/05/06/trump-already-chickened-out-on-hvac-tariffs-mika-brzezinski-says-on-morning-joe.html
[1] The Financial Times commentator, Robert Armstrong, introduced the TACO term, highlighting the unpredictable economic policies of President Trump, leading stocks to react cautiously when faced with tariff threats.
[2] Despite the President's unyielding stance during declarations of potential tariffs, such as the 50% tariffs on goods from the European Union, a sudden change of plans can result in a subsequent relief rally, making it crucial for investors to consider the potential benefits of patience and skepticism when trading in the stock market.
