Donald Trump (Photo Credits: Twitter)
The virality of TACO shows a growing belief among investors that Trump’s tariff threats are often more of a negotiating tactic than a firm policy. Markets tend to drop after his announcements, and then rebound when he softens or delays the measures.
Trump recently also responded to the term, after being asked about it by a reporter. “I chicken out? Oh, I’ve never heard that,” he said on Wednesday. “You mean because I reduced China from 145% that I set down to 100 and then to another number?” The comment refers to his recent moves on China tariffs, where he earlier raised the rates to as high as 145%, and then later reduced them to 30% after facing market backlash.
One another example came when Trump threatened to impose a 50% tariff on imports from the European Union, causing the stocks to fall. But after a phone call with European Commission President Ursula von der Leyen, he gave the EU time till July 9 to reach a deal. The market reacted quickly and the Dow Jones rose by 721 points that day, reported NDTV.
“Wild threats by Trump are not unusual,” wrote Salomon Fiedler of German bank Berenberg in a note quoted by The New York Times. “Given the damage the US would do to itself with this tariff, he will probably not follow through.”
Analysts say that this pattern has also happened before. As a result, some traders now talk about making “TACO trades,” betting that the markets will bounce back once Trump takes his threats regarding tariffs back. The term is also trending online, where users are sharing memes and jokes about it.