The global financial markets have become a real “roller coaster” of ups and downs since Donald Trump took office on January 20, due to the threats and reversals of the United States president with tariffs against the world’s major economies.
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The biggest example is what happened on April 2nd, pompously dubbed by Trump as the “Liberation Day,” when he announced tariffs against almost the entire world, including islands only inhabited by penguins.
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The next day, on April 3rd, Wall Street had its black Thursday with strong drops: the Nasdaq lost around 6%, while the S&P 500 fell by 4.84% and the Dow Jones dropped by 3.98%.
However, the tension in the markets was short-lived. On April 6, just a few days later, Trump announced a moratorium affecting the same measures previously announced. This “flip-flop” caused a significant rise in the markets three days later, with all major indices growing by over 7.5%. The Nasdaq, in particular, led the rebound with an increase of over 12%.
This cycle of threats followed by retreats has become a recurring pattern for Trump, and market analysts have already internalized it.
Trump’s strategies’ nicknames
What was initially known in the financial sector as the “Trump trade” has evolved into a new way of interpreting the president’s decisions. On May 2, journalist Robert Armstrong from the Financial Times proposed a new term to describe this phenomenon: TACO, which stands for “Trump Always Chickens Out.”
The concept has quickly gained popularity in financial circles, serving as a sort of alert. According to this logic, every time Trump announces new protectionist measures, it might be a good time to buy stocks, anticipating a correction of those policies and a subsequent rebound in the markets.
What did Trump say about the term “TACO”?
This Wednesday, during a round with journalists at the White House, Trump was asked if he was familiar with the concept of always “backing down” in the face of threats from his tariffs.
At first, Trump reacted somewhat upset and denied knowing the term. Then he explained his actions: “Why did I raise tariffs and then lower them? Is that why they say I backed down? The European Union didn’t want to meet with us, I imposed a 50% tariff and they called me to meet immediately. That’s called negotiation."
Finally, Trump turned to the journalist who asked him the question: “Don’t ever say what you said, that’s a nasty question.”