What Is ‘TACO Trade’? Trump Unloads on Reporter Who Asked About Tariffs

President Donald Trump unleashed on a reporter Wednesday who asked him about a recently popularized Wall Street term known as “TACO trade” and whether the president “chickens out” on his repeated tariff threats.

Why It Matters

Global markets have experienced a period of significant uncertainty since Trump first rolled out sweeping tariffs targeting almost every U.S. trading partner on April 2, which he dubbed “Liberation Day.”

The president backtracked on the initial announcement after it sent Wall Street into a tailspin, only to later announce additional tariffs targeting specific industries. He also publicly pressured Jerome Powell, the chairman of the Federal Reserve, to lower interest rates and suggested he might fire Powell, before backing down again.

What To Know

On Wednesday, CNBC’s Megan Casella alluded to Trump’s repeated tariff threats while asking him about the “TACO trade” theory, a term that has been making the rounds on Wall Street, which means “Trump Always Chickens Out.”

It was first devised by the Financial Times columnist Robert Armstrong earlier this month.

“Mr. President, Wall Street analysts have coined a new term called the TACO trade,” Casella asked Trump on Wednesday, during the swearing-in ceremony for Fox News host Jeannine Pirro as the interim U.S. attorney in Washington, D.C.

“They’re saying Trump always chickens out on your tariff threats and that’s why markets are higher this week. What’s your response to that?” Casella asked.

The president fired back at Casella, accusing her of asking a “nasty” question and demanding she never ask it again.

“I’ve never heard that. You mean because I reduced China from 145 percent that I set down to 100, and then down to another number, and I said you have to open up your whole country?” Trump said. “And because I gave the European Union a 50 percent tariff and they called up and said, ‘Please let’s meet right now.'”

“You call that chickening out?” Trump said.

“But don’t ever say what you said,” Trump told Casella. “That’s a nasty question. To me, that’s the nastiest question.”

What Is ‘TACO’ Trade?

“TACO trade” refers to the idea that the president spooks the market with his tariff threats before ultimately backing off, prompting them to rebound.

Last Friday, for instance, the market dropped when Trump threatened to levy a 50 percent tariff on imports from the EU. On Tuesday, stocks rallied when Trump announced he would delay the EU tariffs, with the S&P 500 making its biggest gain in weeks.

Armstrong laid out his view when he coined the term earlier this month, writing: “[T]he recent rally has a lot to do with markets realising that the US administration does not have a very high tolerance for market and economic pressure, and will be quick to back off when tariffs cause pain.”

“This is the Taco theory: Trump Always Chickens Out,” Armstrong wrote.

“One might argue that even as Trump walks backward on tariffs, and protects the fortunes of individual industries such as Big Tech, a lot of damage has already been done to global trade and growth — both from ongoing uncertainty and the tariffs that have already stuck,” Armstrong added.

This is a developing story and will be updated when more information is available.