President Donald Trump pushed back on Wednesday on the characterization of his tariff policy as “chickening out” after he announced and then paused tariffs on other countries multiple times.
Trump objected to the description when asked by a reporter, saying it was part of his wider strategy.
“We have the hottest country anywhere in the world. … Six months ago, this country was stone-cold dead. We had a dead country. We had a country, people didn’t think it was going to survive, and you ask a nasty question like that,” the president said.
“It’s called negotiation. You set a number. And if you go down, if I set a ridiculous high number and I go down a little bit, a little bit, they want me to hold that number, 145% tariff. Even I said, ‘Man, that really got up,’” he continued, saying he brought the number down after negotiations.
Wall Street is banking on Trump reneging on his tariff threats, to the extent that it helped buoy an unprecedented market rally. Investors have adopted an acronym for their new trade strategy: “Trump always chickens out,” or TACO. The strategy holds that Trump will always renege on tariff threats, so it’s best to buy the dip following the immediate panic caused by new tariff announcements.
The president reiterated that he wasn’t a fan of the term.
“But don’t ever say what you said, that’s a nasty question. To me, that’s the nastiest question,” he added.
Trump’s April announcement of “Liberation Day,” imposing hefty tariffs on nearly every country, triggered a period of massive market volatility.
April 7 saw some of the most volatile behavior in market history. The S&P 500 witnessed one of the most dramatic swings, taking place over 15 minutes, from 10:10 a.m. to 10:25 a.m.
At 10:10 a.m., traders became aware of an erroneous report amplified by CNBC, claiming Trump was considering a 90-day pause on his “Liberation Day” tariffs. Within 10 minutes, the S&P 500 added $3 trillion. The White House Rapid Response X page quickly shot down the report, calling it “wrong” and “fake news.”
Once traders heard about the denial at 10:20 a.m., the S&P 500 lost $2.5 trillion in five minutes.
The same pattern was reflected in the Nasdaq and Dow Jones.
Announcements of trade deals, tariff deadline extensions, and the lowering of tariffs all helped contribute to a market revival after an initial crash. The market has now regained most of its value, partially due to the TACO strategy.
“So, the returns are somewhat conclusive: The TACO trade has worked and buying stocks on extreme tariff-related threats has worked,” Tom Essaye, founder of Sevens Report Research, said, according to Market Watch.
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Despite paying off so far, however, he warned that long-term prospects are less certain.
“What will determine the next 15%-20% in this market isn’t Trump’s tariff talk. Instead, it’s the economy and whether it can hold up amidst tariffs, policy volatility, higher interest rates, no Fed rates cuts, and pressure on consumer spending,” Essaye said.