The bad news: even if the appeals court had not overturned the recent US trade court ruling declaring most of Donald Trump’s tariffs illegal, Goldman Sachs expects the White House would find new ways to impose duties anyway.
The good news: investors seem unfazed either way.
The Taco trade – short for Trump Always Chickens Out – has become Wall Street’s shorthand for profiting off presidential tariff tantrums. Trump announces sky-high levies, markets plunge, then he backs off and stocks soar. Repeat.
April’s “liberation day” tariffs sent the S&P 500 tumbling 12 per cent. Spooked by market turbulence, Trump paused the plan, sparking the index’s best day in 17 years. A May trade truce with China lifted stocks again.
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And the sell-off that followed Trump’s recent 50 per cent tariff threat on the EU was reversed within days when Trump delayed the levy.
A sensitive soul who prides himself on being the world’s great dealmaker, Trump predictably took offence about what he deemed to be a “nasty” question about the Taco trade at a White House press conference, insisting it’s just “negotiation”.
It’s tempting to mock Trump’s tariff theatrics, but doing so too freely carries risks – pushing him could harden his stance and unsettle markets in ways the Taco trade doesn’t fully anticipate.
As BCA Research’s Peter Berezin tweeted: “The first rule of the Taco trade is that you don’t tell Trump about the Taco trade.”
