It is Wall Street’s new favorite inside joke: the T.A.C.O. trade. No, it is not a food truck ETF or a nationalist Tex-Mex pop-up in Midtown. It stands for “Trump Always Chickens Out,” and it’s the Street’s cynical shorthand for President Trump’s now-predictable tariff bluff routine.
Despite a fresh wave of fiery rhetoric from the White House, where “47” has promised to slap tariffs from 10% to even 100+% on anything that isn’t fast food or made in Ohio, traders aren’t breaking a sweat. They’ve seen this rodeo before.
The trade strategy is simple: expect tariffs to be threatened with dramatic flair, priced into the market with panic… then quietly walked back once Wall Street wobbles in the least or someone on “Mornings with Maria” dares to mention the word “recession.”
You could set your watch or Bloomberg terminal to it.
In recent weeks, the President has rattled sabers at China (again), Mexico (again), and the European Union (yep, again), threatening to “bring manufacturing roaring back” by making imported goods more expensive and American-made goods at least theoretically less so. After initial chest-pounding and some news headlines, though, the pattern emerges: exemptions are issued, enforcement is delayed, and someone “very strong” gets blamed for bad data. Meanwhile, Wall Street investors cash in on the rollback.
Hence, the T.A.C.O.: Trump Always Chickens Out.
Let’s be clear. President Trump has never met a tariff he didn’t tweet about. But when it comes to actually following through on across-the-board trade barriers? Not so much. Back during his first term, Trump imposed a few real tariffs—on steel, aluminum, washing machines—but always with carveouts, loopholes, or quiet retractions after lobbyists and supply chain CEOs came knocking on the White House’s door.
Now, in his second term, the song remains mostly the same but with more bravado. The President takes the podium, proclaims a “trade revolution,” and within days the policy is softer than a Taco Bell tortilla after midnight.
Wall Street is no longer treating this as news. It’s an actual strategy.
Traders are front-running tariff panic with high confidence that the end result will be a walk-back, a renegotiation, or a Phase One Redux. You know, something “the likes of which no one’s ever seen,” except, of course, everyone’s seen it. Twice. Maybe more.
Even the naming of the trade is peak Wall Street sarcasm. They could have called it “Operation MAGA Manufacturing Mirage” or “Import Inflation Hedging 2.0.” Instead, they chose T.A.C.O.—because nothing says “empty calories and temporary satisfaction” quite like the tariff policy of a man who negotiates like he’s still hosting The Apprentice.
Still, you cannot say it’s not effective—for traders, anyway. Stocks often dip on the initial tough talk, only to rebound once the inevitable backpedaling begins. It’s a dance. Trump leads, the market follows, and Goldman Sachs plays the maracas.
As for American consumers? Well, they’re just hoping the price of electronics, appliances, and those foreign-made red hats doesn’t spike too high before the next backpedal.
So yes, President Trump is trying to appear to be a hard negotiator, and tariffs are back on the table. But Wall Street’s not panicking—they’re placing their orders:
Make it T.A.C.O., with extra hedging on the side.