President Trump’s recent delay in imposing tariffs on the European Union has led to a temporary reprieve for businesses and a rally in the stock market. However, confusion still surrounds the criteria for countries to maintain lower tariff rates, with White House National Economic Council Director Kevin Hassett stating that “good-enough offers” might suffice. The unpredictable nature of Trump’s tariff announcements has given rise to the “TACO” trade theory, which stands for “Trump Always Chickens Out.” When tariffs are threatened, consumer sentiment drops, but when there are indications that tariffs might not be implemented, consumer happiness spikes.
This volatility creates opportunities for strategic trading but proves challenging for businesses trying to navigate the uncertain landscape.
Markets rally on tariff delay
Sources close to Trump’s team suggest that the president enjoys the market’s reaction to his tariff maneuvers, finding power in the volatility he can generate with a single statement or social media post.
This raises questions about who, if anyone, receives advance warning of these announcements. Trump expressed frustration with the “TACO” theory, stating, “You mean because I reduced China from 145% that I set down to 100, and then down to another number, and I said you have to open up your whole country? And because I gave the European Union a 50% tariff and they called up and said, ‘Please let’s meet right now’ …
You call that chickening out?”
As businesses and markets remain on high alert, trying to anticipate and navigate the unpredictable landscape of U.S. trade policy, the world watches and waits for Trump’s next move.
