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By Sonam Sheth
Evening Politics Editor
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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."
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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 circulating on Wall Street, which translates to "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 tax—tariff—and they called up and said, 'Please let's meet right now.'"
"And I said, ok, I'll give you til July 9—I actually asked them, I said what's the date, because they weren't willing to meet," Trump added, referring to the EU tariffs. "And after I did what I did, they said, 'We'll meet any time you want.' And we have an end date of July 9."
"You call that chickening out?" Trump said, before going on to emphasize the investments that multiple companies have pledged to make in the U.S.
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"This country was dying," Trump said of the U.S. under the Biden administration. "You know, 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 was going to survive and you ask a nasty question like that."
"It's called negotiation," he added.
"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.
What People Are Saying
Justin Wolfers, an economics professor at the University of Michigan, told MSNBC on Tuesday: "This was a tariff policy from Trump that nearly lasted one entire long weekend. He was a little unlucky; it was Memorial Day, [which] extended the weekend to three days, and you couldn't have a tariff policy last a full weekend. So Friday's policy was reversed by Monday, and so we get to analyze it today on Tuesday."
He went on to reference TACO trade, saying: "There's an asset here that really matters called American credibility. There was a time when the president opened his mouth, when you had to pay attention because you thought it meant something, that it was a shift in policy that other countries could rely on and respond to. That's no longer the case. In fact, on Wall Street right now—and it's on one level funny and on another level tragic—there's a trade called the TACO trade. T-A-C-O: Trump always chickens out."
Salomon Fiedler, an analyst at the German bank Berenberg, predicted on Friday that Trump's EU tariff threats wouldn't last, writing in a note: "This latest pronouncement is likely just another step in the volatile trade negotiations."
He added, "Wild threats by Trump are not unusual. Given the damage the U.S. would do to itself with this tariff, he will probably not follow through."
Chris Beauchamp, the chief market analyst at IG Group, said after Tuesday's stock rally: "TACO trade triumphs once again."
What Happens Next
Trump announced over the long weekend that the latest round of tariffs will be delayed until July 9, while U.S. and EU officials hold trade discussions.
Update 5/28/25 4:41 p.m. ET: This story was updated with additional information.
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