Traders have come up with a snarky shorthand for characterizing President Trump’s trade policy: TACO. Trump Always Chickens Out.
Trump has whipsawed markets by threatening tariffs, imposing tariffs, raising tariffs, lowering tariffs, and sometimes backing down from tariff threats. Stock values have followed the bouncing tariff in an inverse pattern: down when Trump’s tariffs go up, and vice versa. Investors who have bought the dips, betting that Trump will relent on tariffs and stocks will go back up, have generally done OK.
The only problem with the TACO trade is that the premise isn’t true. Trump doesn’t always chicken out. His threats are often worse than his actions, but five months into Trump’s term, it is abundantly clear that taxes on imports will be considerably higher for as long as Trump is in charge.
TACO joined the financial vernacular after Trump threatened a 50% tariff on imports from Europe, then backed down after European trade negotiators picked up the phone and started talking with Trump about a trade deal that might avert the tariffs. Financial Times columnist Robert Armstrong had used the phrase TACO in a May 2 opinion piece, but it was Trump’s flip-flop on the Europe tariffs on May 26 that sent the acronym viral.
Read more: What Trump’s tariffs mean for the economy and your wallet
As Armstrong explained, the TACO trade is a good thing and markets generally cheer when Trump dials back a tariff threat. Tariffs are a tax on imports that raises costs for everybody who buys an import, and higher costs mean more inflation and lower profits. When Trump backs down on a tariff threat, it means less tax money going to the US Customs Bureau and more staying in consumer and business bank accounts.
Trump bristles at the taunt. When a reporter asked him about the TACO meme on May 28, Trump called it a “nasty question” and said, “They’ll say oh, we was chicken. He was chicken. That’s unbelievable. Usually I have the opposite problem.”
WASHINGTON,DC – MAY 28:U.S. President Donald Trump speaks during a swearing-in ceremony for the interim U.S. Attorney for the District of Columbia, Jeanine Pirro, at the White House in Washington, D.C., U.S., May 28, 2025.(Photo by Sarah L. Voisin/The Washington Post via Getty Images) · The Washington Post via Getty Images
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Trump squawking about whether he’s a chicken is a priceless bit of ironical bravado, but in reality, Trump is right. He threatens absurdly high tariffs the way a homeowner might post an unrealistic asking price when first listing a house for sale. Trump doesn’t do that because he wants to end up at the same tariff level he started at. He does it to end up at a higher tariff level and maybe get something in return.
It would be more accurate to say Trump sometimes chickens out. But TSCO isn’t a pithy acronym, and if Trump happened to deescalate a trade threat on a Tuesday, nobody would get the joke if you joshed about TSCO Tuesday.
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