President Donald Trump on Wednesday pushed back against an emerging critique of his on-again, off-again tariff threats, which has been derisively summed up as the “TACO trade.”
The term coined by a Financial Times columnist — which stands for “Trump Always Chickens Out” — describes a pattern in which Trump announces heavy new tariffs, sending markets tumbling, and then later pauses or lightens them, causing markets to rebound.
When asked by CNBC about the term at the White House, Trump denied that he had ever backed down and suggested that his moves have helped the U.S. gain ground in trade negotiations.
“After I did what I did, they said, ‘We’ll meet anytime you want,'” Trump said of the European Union, which he had recently targeted with a 50% U.S. tariff — before announcing two days later that he was delaying that new levy.
“You call that chickening out?” Trump said.
“It’s called negotiation,” he added, after criticizing the question as “nasty.”
Stocks fell Friday after Trump called for the U.S. to impose the steep tariff on the EU starting June 1. On Sunday, Trump said he would delay that deadline to July 9 after European Commission President Ursula von der Leyen asked for an extension.
In the next trading session on Tuesday, stocks rallied across major indexes.
Trump in Wednesday’s remarks went on to credit the 50% tariff threat with jumpstarting trade talks between the U.S. and the EU.
“The sad thing is, now, when I make a deal with them, it’s something much more reasonable, they’ll say, ‘Oh, he was chicken, he was chicken,'” Trump said. “That’s so unbelievable.”
The EU-tariff turnabout is not Trump’s first time abruptly reversing his own trade policies.
After weeks of buildup, Trump on April 2 unveiled individualized “reciprocal” tariff rates against almost every country on Earth, with some getting hit with massive duties of 30% or more.
One week later — and following several bouts of stock-market turmoil — Trump said he would drop all of those tariffs down to 10% for 90 days. Markets responded with one of the biggest single-day rallies in history.
The Trump administration’s trade war with China has followed a similar path. The president in April ratcheted up blanket tariffs on Beijing as high as 145%, spurring retaliation and spooking investors. He dropped them to 30% a month later, following an initial round of trade talks.
— CNBC’s Laya Neelakandan contributed to this report.
