Wall Street traders have adopted a term to mock President Trump’s flip-flopping trade policy.
TACO, an acronym that stands for “Trump Always Chickens Out,” was coined by Financial Times columnist Robert Armstrong. It has since become a favorite among stockbrokers.
Simply put, the tongue-in-cheek term describes how markets dip on President Trump’s tariff threats, only to rebound when he inevitably reverses course.
In the latest example, markets rallied earlier this week after Trump delayed the 50 percent tariff on the European Union that he had threatened just days earlier. In response to his relenting, the S&P 500 posted its biggest gain in weeks.
Speaking on MSNBC Tuesday, Australian economist Justin Wolfers mocked Trump by saying this tariff policy “nearly lasted one entire long weekend.”
“He was a little unlucky. There was Memorial Day, extended the weekend to three days, and you couldn’t have a tariff policy last a full weekend. So, Friday’s policy was reversed by Monday. And so, we get to analyze it today on Tuesday. And I think that’s really symptomatic,” he said.
Suggesting that Trump’s word is worth very little in certain circumstances, including tariff threats, Wolfers used the example of Wall Street’s new favorite acronym.
“In fact, on Wall Street right now, and it’s one level funny and another level tragic. There’s a trade called the TACO trade, T-A-C-O, Trump Always Chickens Out,” he said.
Wolfers had said Trump’s word now lacks “credibility.”
“There was a time when the president opened his mouth, when you had to pay attention because you thought it meant something, that it was a shift in policy that other countries could rely on and respond to. That’s no longer the case,” he said.
Salomon Fiedler, an analyst from German bank Berenberg, is just one of many speculators who now say they are happy to wait it out when Trump makes a threat.
“Wild threats by Trump are not unusual,” he wrote in a note last month, when the president “paused” the super-charged “Liberation Day” duties he imposed on a slew of countries. “Given the damage the U.S. would do to itself with this tariff, he will probably not follow through.”
Trump paused the duties to allow his economic buffs to secure renewed deals with dozens of nations. So far, only the United Kingdom and China have inked any sort of agreement.
