Who / What
Trump Always Chickens Out (TACO) is a term that gained prominence in May 2025 following numerous threats and reversals during the trade war initiated by US President Donald Trump. It describes the tendency of the administration to make tariff threats but subsequently delay them to allow for negotiations and market recovery.
Background & History
The term emerged after Donald Trump's administration initiated "Liberation Day" tariffs, which led to many threats and subsequent reversals during the trade war. The acronym TACO is used to characterize Trump's pattern of making tariff threats only to later postpone them. This delay was a strategic move to increase time for negotiations and enable markets to rebound.
Why Notable
TACO is widely used on Wall Street to describe a specific trading mechanism related to tariff announcements. It involves buying stocks cheaply after a tariff threat pushes prices down, and then selling them at a profit once the tariffs are delayed or reduced and the market rebounds. This highlights the financial impact of tariff policy uncertainty.
In the News
The TACO trade is relevant on Wall Street, where investors engage in this strategy following tariff announcements. It matters now because it illustrates how tariff policy uncertainty affects stock prices and trading behavior in the financial markets.
