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How Trump’s TACO Set the Stage for Our Current ‘Catastrophe’: Columnist
President Donald Trump’s inadvertent “TACO” strategy is the vehicle that drove America to its current catastrophe.
Andrew Egger at The Bulwark writes on the eve of the one-year anniversary of “Liberation Day” — when the president imposed “an unbelievably strict regime of massive tariffs,” Trump’s eventual retreat from those measures, now dubbed “TACO” (“Trump Always Chickens Out”), has become ingrained in how markets and nations interpret the American president’s every move.
After holding firm for about one week, Trump caved on his massive tariffs — after markets went haywire.
“This was the moment that the world learned the lesson that Trump would, in the final and bitterest moment, respond to normal economic stimuli,” Egger writes.
Trump’s momentum had seemed “unstoppable,” until Liberation Day, but, “faced with the prospect of inevitable economic calamity, he had blinked.”
Trump’s actions created a clear lesson for the markets: if they got spooked, Trump would “see reason.” So, those who rode out the wave of Trump’s “nightmare” policy swerves stood to benefit “when Trump abruptly chickened out.”
“Overnight, the TACO trade was born.”
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But now, everyone assumes Trump will ultimately chicken out. So when he says or does something that creates chaos in the markets or the headlines, the reaction is no longer as severe, because everyone is wise to his apparent strategy.
“The only thing that seems to get through to Trump is catastrophic market movements—but those market movements are not only reacting to Trump, but trying to predict him, too,” Egger writes. “The more the TACO trade philosophy permeates through the markets, the less the markets respond to Trump’s rash impulses and grandiloquent proclamations—because they expect him to reverse course once the damage becomes obvious.”
Now, Trump risks “a global depression by precipitating Iran’s blockade of the Strait of Hormuz—and has now apparently deluded himself into thinking America can actually get on just fine without solving that problem.”
Markets have yet to go “truly berserk … in part because they’re expecting Trump to change course. But he has convinced himself he has little incentive to change course, since they haven’t yet gone berserk!”
Liberation Day, writes Egger, “wasn’t just the economic catastrophe that set the tone for the 2025 economy. By introducing us to the TACO model, it sowed the seeds of our present catastrophe, too.”
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Image via Reuters
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