Trump calls question about TACO trade the most disgusting

Trump calls question about TACO trade the most disgusting

Wall Street has experienced a historic roller coaster ride in recent months, marked by President Donald Trump's recurring tariff threats. Investors are now learning to take his statements with caution — and perhaps also with a pinch of humor.

The TACO phenomenon

A new commercial term has emerged: TACO, which stands for “Trump Always Chickens Out.” Simply put, this means that one shouldn't worry too much about Trump's latest tariff threats, as he usually backs down in the end, which can lead to a drop in relief in the markets.

Trump's pun and tariff adjustments

Trump said he first heard the term from Financial Times commentator Robert Armstrong when a journalist asked his opinion. "I'm backing away? Oh, I've never heard that before. You mean because I reduced China's tariff rate from 145% to 100% and then to another number?" said Trump, alluding to the tariffs he has imposed on Chinese imports. The rate is currently at 30%, after Trump raised it to as high as 145% last month, only to lower it again a few weeks later.

Current developments on tariffs

Last week, Trump threatened to impose 50% tariffs on European Union goods by June 1. Stock markets reacted negatively to his threat, which he reiterated later that day by declaring that there was no room for negotiations. Two days later, he announced he would wait until July 9 to impose the 50% tariffs on EU goods after promising talks. However, when the US markets reopened after Memorial Day, stock prices closed significantly higher.

Negotiations or withdrawal?

Trump said he was willing to delay this step because EU officials offered him: “Please, let’s meet immediately.” Asked by a reporter if that wasn't a backpedal, Trump replied: "Do you call that chickening out?" and was referring to his recent announcements about tariffs on EU and Chinese goods.

Trump's tariff strategy

"It's called negotiating," Trump added, explaining that part of his tactic is to first set "an absurdly high number" for tariffs, then reduce them when other countries give in to his demands. "Never say what you said," Trump rebuked the reporter, calling the question "the meanest question."

A review of his customs policy

The U-turns on tariffs against China and the EU are far from the only ones Trump has made. On April 2, he announced sweeping “reciprocal” tariffs on dozens of countries, set to take effect on April 9. However, hours after the tariffs went into effect, he announced a 90-day pause for all affected countries except China as investors became "upset."

Market reaction to tariff changes

Translated, this means that the US financial markets, particularly the bond market, did not take his tariff changes particularly well. In fact, markets had been falling before the pause was announced and the S&P 500 was on the verge of slipping into a bear market while bond yields rose as investors sold U.S. debt.

Positive market reaction following the announcement

Following the pause announcement, the S&P 500 posted its best single-day gains since October 2008.