Archive · 23 Jan 2026
Trump's Greenland Threat Revives 'TACO' Trade
President Trump has a habit of threatening new tariffs, which often causes stock markets to drop.
However, he usually backs down or changes his mind after a short time.
Investors have noticed this pattern and have started a strategy called the 'TACO' trade, which stands for 'Trump Always Chickens Out'.
They buy stocks when Trump first threatens tariffs, expecting that he will eventually back down and the market will go back up.
This strategy has worked well in the past, but some worry it might not last forever.
The tariffs can cause problems like higher prices and slower economic growth, which is why markets react negatively at first.
The 'TACO' trade is a way for investors to make money from Trump's unpredictable behavior.
President Trump's tariff threats have caused market volatility, leading to the 'TACO' trade strategy.
The 'TACO' trade involves buying stocks after tariff threats and selling after the inevitable rebound.
Trump's pattern of threatening and then reducing tariffs has become predictable, allowing investors to profit.
Tariffs risk inflation, slower economic growth, and higher consumer prices, causing initial market drops.
The 'TACO' trade has yielded a 12% return since February 2025, but its longevity is uncertain.
- Who
- US President Donald Trump, investors, traders
- What
- Trump's tariff threats and reversals, the 'TACO' trade strategy
- When
- Repeatedly in the past year, with notable events in April, May, October, and January
- Where
- Global financial markets, particularly the US and Europe
- Why
- Trump's tariff threats cause market volatility, leading to a predictable pattern of stock drops and rebounds
- TACO Trade
- Trump Always Chickens Out
- Origin of TACO
- Coined by Financial Times columnist Robert Armstrong in 2025
- Market Reaction
- Stocks drop on tariff threats, rebound when Trump relents
- TACO Trade Strategy
- Buy stocks after tariff threats, sell after rebound
- Trump's Negotiation Style
- Sets high tariffs, then reduces them
- Impact of Tariffs
- Risk of inflation, slower economic growth, higher consumer prices
- TACO Trade Returns
- 12% return since February 2025 by shorting and buying S&P 500 futures