Trump's TACO trade is no joke: How memes, markets and tariffs collide
Wall Street's nickname for Donald Trump's tariff flip-flops — TACO, short for "Trump Always Chickens Out" — drew a sharp reaction from the president. Questioned about it in the Oval Office, Trump denied backing down and called the label 'a nasty question.' Investors coined the term to reflect a pattern: Trump threatens tariffs, markets drop, then he retreats. Market players now use the pattern to their advantage, triggering rallies once he relents. Trump calls it negotiation, not retreat.
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The pattern that shaped a play
From Twitter talk to trading tactic
Behind the bluff: A high-stakes game
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When markets don't need TACO—courts intervene
The internet reacts: memes, mockery, and criticism
In the Oval Office on Wednesday, President Donald Trump was asked about a rising Wall Street phrase: 'TACO trade' short for ' Trump Always Chickens Out.' His response was blunt. 'I chicken out? Oh, I've never heard that,' he said, smirking. Then came a defensive swipe. 'But don't ever say what you said,' Trump told the reporter. 'That's a nasty question. To me, that's the nastiest question.'This term, coined by Financial Times columnist Robert Armstrong , describes a trend investors say they've spotted. When Trump announces aggressive new tariffs, markets often dip. But when he backtracks — sometimes days later — they rally again. It's become a playbook on the trading floor.Armstrong, who pens the FT's Unhedged newsletter, explained how the idea came about. 'I needed a shorthand way in my newsletter to describe this pattern, because it was an important pattern in markets. And perhaps I was hungry, too, and so I came up with the acronym TACO ,' he told Axios. It started as an inside joke but soon turned up in brokers' notes and, eventually, media headlines—and now, even a question to the president himself.Investors have been watching the pattern closely. After Trump's recent threat to slap 50% tariffs on EU imports by 1 June, stocks dipped. But when he delayed the action to 9 July following a call from EU leaders, markets rebounded after the Memorial Day holiday.'The TACO trade is real,' said one Wall Street trader speaking anonymously. 'Every time there's a threat, you wait for the reversal—it's like Trump's tell at the poker table.'Trump's tariff standoffs have grown more frequent and more erratic. Earlier this year, he hiked tariffs on Chinese imports to 145%. After investor pushback and diplomatic overtures, he cut them — first to 100%, then eventually to 30%. Traders now read his opening threats as a bluff, waiting for the climbdown before piling back into the market.'You call that chickening out?' Trump shot back when asked about the TACO label. 'It's called negotiation,' he said. 'If I get them to give in, I lower the number.'He pointed to recent developments with the European Union . Last week, Trump warned of 50% tariffs on EU goods starting June 1. Stocks fell sharply. But within days, he said he'd delay the move until 9 July after what he called 'promising talks.' 'They called up and said, 'Please let's meet right now,'' Trump said. 'So I said, OK.'Trump insists this is part of a strategy to force other nations to the negotiating table. 'If I get them to give in, I lower the number,' he explained Wednesday.The TACO term has gained traction fast. What started as a newsletter quip is now appearing in financial notes and major headlines. Armstrong told Axios, 'I needed a shorthand way in my newsletter to describe this pattern, because it was an important pattern in markets. And perhaps I was hungry, too, and so I came up with the acronym TACO.'At first, it didn't stick. 'It was definitely not becoming a thing,' Armstrong said. But it began showing up in brokers' reports and finally found its way into press briefings — all the way to the White House Traders now watch tariff threats closely, seeing them less as policy and more as market signals. 'The TACO trade is real,' said a Wall Street trader speaking anonymously. 'Every time there's a threat, you wait for the reversal — it's like Trump's tell at the poker table.'Trump's defence is simple: it's a tactic. 'Setting a ridiculously high number' is part of the strategy, he claimed, designed to push countries into talks. 'And because I gave the European Union a 50 percent tariff and they called up and said, 'Please let's meet right now'.'Yet this method has rattled financial markets. On April 2, Trump announced broad 'reciprocal' tariffs on dozens of countries. Within hours of them taking effect, he walked them back — offering a 90-day pause for all nations except China. He later explained it was due to 'yippy yappy' markets, hinting at investor panic.The markets had reacted swiftly. The S&P 500 teetered near bear territory, and bond yields spiked. Once the pause was in place, the S&P 500 posted its best single-day gain since 2008.Yet not all reversals are Trump's own doing. On Wednesday night, a panel of judges at the U.S. Court of International Trade blocked a wide set of tariffs introduced by the administration, ruling Trump lacked the legal authority to implement them. This undercut a central pillar of his trade tactics and highlighted that even the courts can play spoiler to tariff threats.Beyond the trading floors, the term TACO has taken off online, spawning memes and jokes. One Reddit user joked, "Tariff time! Tacoflation is about to pop off. Hope you are stocked up on tequila," capturing both humour and economic worry. Others warned of "$10 tacos", mocking the potential inflation tied to tariffs on food imports.Not everyone's laughing, though. Critics of the administration say the constant flip-flopping weakens economic stability. 'Tariffs aren't actually inflationary, but clearly Trump opponents want them to be so they can have an 'I told you so' moment,' one user wrote, reflecting the growing political friction the trade wars have sparked.For Armstrong, the man behind the term, the experience is surreal. 'I want to be famous for my dumb joke, definitely,' he told Axios, 'but I also don't want the president to ruin the U.S. economy. And so I'd like to have both of those things, if at all possible.'
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