Overview

• The term “TACO trade” was coined by Financial Times writer Robert Armstrong as an acronym for “Trump Always Chickens Out” to describe repeated market rebounds following his tariff pauses.
• On May 23, President Trump announced a 50 percent tariff on EU imports, triggering a selloff before delaying the measure to July 9 after a call with European Commission President Ursula von der Leyen.
• The Dow Jones Industrial Average climbed 721 points (1.73 percent) on May 27 as traders anticipated the postponed tariffs would never take effect.
• Market participants have adopted the strategy of buying stocks on initial selloffs induced by Trump’s trade threats and selling once he signals a reversal.
• Economists including University of Michigan’s Justin Wolfers say the phenomenon is unprecedented in U.S. presidential history and reflects growing market skepticism toward administration trade pronouncements.