Stocks Surge with the ‘TACO Trade’ as Trump Delays Tariffs – What It Means for Investors

Stock markets saw a significant rise on Tuesday, with the S&P 500 gaining over 2%. This boost came after President Trump announced a delay on a planned 50% tariff on goods from the European Union, a move that had just recently caused market drops.

Analysts noted the pattern of markets reacting swiftly to Trump’s tariff threats. When tariffs are mentioned, stocks often drop. But when he backs off, like he did with the EU tariffs, they rebound quickly. This cycle has even earned a light-hearted nickname: the “TACO” trade—“Trump Always Chickens Out.” Financial Times columnist coined this phrase, highlighting the predictability of market reactions during these tariff discussions.

Over the weekend, Trump stated that the tariffs would not take effect until July, which sparked a rally in global markets. Paul Donovan from UBS Wealth Management remarked that these retreats are so common that investors should now be ready for them. Meanwhile, Chris Beauchamp from IG Group humorously noted the triumph of the TACO trade as U.S. markets reopened.

Despite these ups and downs, some analysts, like Salomon Fiedler from Berenberg, maintained that extreme threats from Trump generally do not result in long-term damage. He argued that imposing these tariffs would harm the U.S. economy too much for Trump to follow through.

Interestingly, the market’s volatility isn’t confined to just the EU situation. Other tariffs on China and various trading partners linger, and the U.S. has applied the highest tariffs in over 90 years. The S&P 500, while slightly up since the tariff discussions began, remains around 4% lower than its record high in February.

This ongoing back-and-forth is being noted by traders and experts alike. Market sentiment often swings with news of tariff changes, making it crucial for investors to stay informed. Understanding these trends helps gauge the potential impacts on stock performance, revealing a complicated but fascinating relationship between policy decisions and market reactions.



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International Trade and World Market,Standard & Poor’s 500-Stock Index,Customs (Tariff),Stocks and Bonds,Trump, Donald J,United States Politics and Government,Threats and Threatening Messages,European Union,Financial Times,Europe,United States