Trump vs. Wall Street’s ‘TACO’ Trade: The Tariff Talk That’s Rattling Markets—and Egos

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Date: May 29, 2025
By: Ghanns

If there’s one thing former President Donald Trump doesn’t like, it’s being mocked—especially by the titans of Wall Street. This week, a new term circulating among traders has managed to do exactly that, sparking frustration in the Oval Office and amusement on trading floors.

The acronym? TACO — short for “Trump Always Chickens Out.”

Born in the chaos of Trump’s flip-flopping on global tariffs, the term has quickly become a shorthand among investors for a now-familiar market pattern: Trump threatens steep tariffs, markets react in panic, and then he walks it back, sparking a relief rally. Traders have learned to profit from the volatility, and now they’ve given it a name. Trump, however, is not loving the branding.

The Art of the (Tariff) Deal?

The former president lashed out at a reporter during a press conference on Wednesday when asked about the moniker. “Don’t ever say what you said. That’s a nasty question,” Trump snapped, visibly agitated. “I usually have the opposite problem — they say you’re too tough!”

The frustration came on the heels of his latest tariff maneuver: After announcing a sweeping global tariff hike on what he dubbed “Liberation Day,” Trump cut the increases dramatically, from a high of 145% down to a more manageable 10%. Similar reversals followed in negotiations with the EU and China, where Trump pulled back on a proposed 50% tariff and delayed the deadline instead.

To the markets, this is just another day in the Trump tariff cycle: loud threats, rattled markets, and then a soft climbdown. Investors have turned the unpredictability into a pattern—and that pattern into a meme.

Traders Profit, Trump Bristles

“TACO” trades were first popularized by The Financial Times but have since become Wall Street slang. CNBC’s Megan Casella brought up the term during the Oval Office presser, triggering Trump’s ire.

“I kick out?” Trump asked, confused.

“No, chicken out,” Casella clarified.

Trump dismissed the idea as a gross mischaracterization, arguing his tough stances had brought countries to the negotiating table. “It’s called negotiation,” he explained, defending his strategy of starting with extreme tariffs and pulling back once concessions are won.

Casella later joked on CNBC that being called out by Trump for asking a “nasty question” was “a badge of honor.”

The Market Strategy Behind TACO

At its core, the TACO acronym underscores how closely financial markets have come to follow—and capitalize on—Trump’s rhetoric. Investors understand the pattern: when Trump threatens, markets dip; when he backtracks, they bounce.

Analysts believe this repeat cycle, however erratic, is predictable enough to build investment strategies around. The nickname may be flippant, but the trades are real—and profitable.

What’s Next?

With Trump still heavily involved in shaping Republican economic policy and considering another presidential run, the volatility isn’t likely to go away. For investors, that means the TACO trade might be sticking around for a while. For Trump? He’d probably prefer another acronym—one that doesn’t suggest he ever backs down.

In the meantime, Wall Street will keep watching, reacting, and—yes—naming every move.