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The journey from taco bowl to taco bull is one way to track Donald Trump for the past nine years. (Hey, don't click! This is going somewhere!)
Back in May 2016, the then-GOP presidential candidate posted a photo of himself eating the Tex-Mex main course at Trump Tower. "I love Hispanics!" he wrote. Almost everyone understands this is an awkward pander.
Now, in May 2025, Wall Street is full of the “taccharide trade”, another example of people realizing that they shouldn’t be on the president. "Taco" is "Trump always chicken out." Markets tend to decline when Trump announced new tariffs, but investors have realized that many of them are bluffing, so they are buying dipping sauces Then profit from the inevitable rally.
A reporter asked Trump about the expression Wednesday and he was angry. "Have I gone out? I've never heard of it." "Never say what you say. It's an annoying question. For me, it's the most annoying question." The reaction shows that the trader is right because - the hybrid animal metaphor - the killer can be harsh. The White House has been talking about imposing new tariffs on friends and geopolitical rivals, but Trump often continues to lower measures or delay measures for weeks or months.
Foreign leaders believe that by May 2017, Trump had overturned, and a year later, I detailed his almost always folded pattern. Despite his unpredictable nature, he is an ideal negotiating foil, as he tends to be less aware of his material, has little attention, and is easily manipulated by flattery. It is worth noting that it took Wall Street so long to catch up.
Even if no president is a purely businessman like Trump, he and the market never really know each other. This is partly because, as I wrote yesterday, Trump is not that good at business. Despite the years, despite the many interest adventures, his most effective source of income was his estate property that collected rent and served as presidential rent. His approach to protectionism is based on a fundamental misunderstanding of trade.
Yet, despite years of cracking passwords, Wall Street never seems to have a much better grasp of Trump. (It is worth recalling the so-called omniscience of the market missionary talking about the market.) The financier tries to understand Trump in black and white terms, but the mission requires subtle recognition, for example, he may take fatal seriousness and very easily fold details on abstract tariffs.
Although they despised him during his first term, many industry giants sought accommodation with Trump during the 2024 campaign, hoping he was more friendly than Joe Biden. However, once Trump's tenure began, they were startled to learn that he did want tariffs, even though he had been advocating their first term since the 1980s and putting them at the center of his 2024 campaign.
But Trump’s commitment to tariffs does not mean that he has prepared for them or thought through their details. The government has announced that it will suspend, reduce or threaten new tariffs in China, Mexico, Canada and the EU. All of these volatility is ostensibly the product of ongoing negotiations, but in many cases it is also a response to market turmoil, or a lack of clarity on details. (This week, two federal courts also ruled that the president has surpassed his power by imposing tariffs under emergency powers.)
This is the source of taco deals. Investors were not panicked, but began to master this model. But once people get the hips, Wall Street arbitrage ends up losing its power. In this case, the fact that Trump understands the taco trade may be its downfall. The president may be flippant, but his history shows that it is easy for him to dare to take bad choices by asking his reporter.
One can imagine the situation here that is bleak: Trump is ashamed to follow economically harmful tariffs. The market did not take him seriously at first, which removed any external pressure from his reversal process. Once investors realize he is real this time, they will panic and market tanks. If the president stops chickens, Wall Street and the American people will not be able to escape the consequences of his worst thoughts.
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*Main Image Credit: Illustrations from the Atlantic Ocean. Source: Saul Loeb/AFP/Getty; Yuri Gripas/Abaca/Bloomberg/Getty; Stefani Reynolds/Bloomberg/Getty; chip somodevilla/getty; win McNamee/Getty
Stephanie Bai contributed to the newsletter.
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