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A new acronym is making its rounds on Wall Street: TACO
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“Trump Always Chickens Out” refers to markets betting on Trump walking back tariff proposals.
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Trump called the TACO moniker “nasty” when asked about it on Wednesday.
First, it was the Trump trade; now it’s TACO. The new meme, first floated by The Financial Times this month, is making the rounds on Wall Street as a blueprint for playing the stock market in 2025.
It’s an acronym for “Trump Always Chickens Out.”
As demonstrated several times this year, the stock market has dipped sharply on President Donald Trump’s trade war proclamations, but it has inevitably rocketed back up when the president retreats.
In other words, when Trump announces new tariff policies, it might be a good time to buy.
A few months into Trump’s presidency, there are several examples of the TACO trade at work.
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When Trump issued his sweeping “Liberation Day” tariffs on April 2, the S&P 500 tanked over 12% in the following days. On April 9, Trump announced a 90-day pause, igniting a furious stock rally that included the best day for the S&P 500 in nearly two decades.
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Meanwhile, the index has gained over 1% since mid-May, when the White House announced a framework trade deal with China that lowered tariffs for 90 days. The development helped stocks recover all of their losses since the April lows.
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The latest example came just last week after Trump called for a 50% tariff on the European Union starting on June 1, which sparked a slide in the stock market that day. Then, over the weekend, Trump announced that he’d delay the tariffs until July 9. The S&P 500 rebounded by nearly 2% on Tuesday as traders returned from Memorial Day.
“I think the only person or entity he listens to is the stock market,” Eric Sterner, the chief investment officer at Apollon, told Business Insider. “I think that’s a big part of his scorecard — what the stock market does.”
On Wednesday, Trump fired back at the assertion that he’s backed down in the face of protests by the market, calling the TACO acronym “nasty.”
“They wouldn’t be over here today negotiating if I didn’t put a 50% tariff on,” the president said in response to a question from a reporter. “The sad thing is, now, when I make a deal with them — it’s something much more reasonable — they’ll say, ‘Oh, he was chicken. He was chicken.’ That’s unbelievable.”
Trump’s election win injected a massive shot of bullish excitement across Wall Street. The subsequent rally in a handful of assets such as crypto, Tesla stock, and bank shares was dubbed the Trump trade.
