{"id":3255,"date":"2025-10-16T20:57:41","date_gmt":"2025-10-16T20:57:41","guid":{"rendered":"http:\/\/ft365.org\/index.php\/2025\/10\/16\/the-taco-trade-how-trumps-tariff-u-turns-became-a-strategy\/"},"modified":"2025-10-16T20:57:41","modified_gmt":"2025-10-16T20:57:41","slug":"the-taco-trade-how-trumps-tariff-u-turns-became-a-strategy","status":"publish","type":"post","link":"https:\/\/ft365.org\/index.php\/2025\/10\/16\/the-taco-trade-how-trumps-tariff-u-turns-became-a-strategy\/","title":{"rendered":"The TACO Trade: How Trump\u2019s Tariff U-Turns Became A Strategy"},"content":{"rendered":"
\n

If you\u2019ve been keeping an eye on the markets this year, you know it\u2019s been a roller coaster, and it\u2019s not just from central bank policy shifts or assets hitting record levels.<\/p>\n

I\u2019m talking about times when U.S. President Trump announces huge tariffs and markets tumble, only for him to walk it back days later and send prices soaring again.<\/p>\n

We\u2019ve seen this exact scenario play out several times in just the past few months.<\/p>\n

It\u2019s happened so often that Wall Street even turned the chaos into an acronym: TACO, <\/strong>which stands for \u201cTrump Always Chickens Out.\u201d<\/strong><\/p>\n

It\u2019s not just a meme\u2014it became an actual trading strategy:<\/p>\n

Buy<\/strong> the dip after tariff threats<\/em>, then sell<\/strong> when Trump inevitably backs down<\/em>.<\/p>\n

For six months, it worked like clockwork.<\/p>\n

Until October 2025, when China proved the pattern might finally be broken.<\/p>\n

Let\u2019s TACO-bout it.<\/p>\n

The Birth of TACO: Liberation Day Goes Sideways<\/h2>\n

The story starts on April 2, 2025\u2014\u201dLiberation Day.<\/strong>\u201d Trump unveiled massive tariffs on over 180 countries. China got hit with 54% tariffs, the EU with 20%, Vietnam with 46%. The market response was savage.<\/p>\n

The S&P 500 dropped more than 10% in three days. Safe haven gold breached $3,150 for the first time. TRILLIONS of dollars vanished. Analysts called it \u201cworse than worst-case scenario.\u201d<\/p>\n

Then came the twist: One week later, Trump hit pause. He dropped most tariffs to 10% for 90 days. Markets exploded higher. By May, all the losses were erased.<\/p>\n

This pattern is repeated throughout spring and summer. NBC News counted TEN separate times Trump threatened tariffs, then backed down. Europe, China, Colombia\u2014same story every time. Big threats, market selloff, then retreat.<\/p>\n

Financial Times gave it a name in May: the \u201cTACO theory\u2014Trump Always Chickens Out.\u201d California Governor Gavin Newsom joked, \u201cIt\u2019s raining tacos today\u201d after a court struck down some tariffs.<\/p>\n

The trading playbook was dead simple: When Trump announces tariffs and stocks tank, buy. When he backtracks and markets rally, sell.<\/p>\n

Rinse, repeat, profit.<\/p>\n

TACO Meets Reality: China\u2019s Rare Earth Power Play<\/h2>\n

Fast-forward to October 9, 2025.\u00a0China announced that starting December 1, companies would need special licenses to export anything with rare earth minerals<\/strong> in it.<\/p>\n

This is a BFD, as China controls over 90% of the world\u2019s processed rare earths<\/strong>, materials critical for everything from iPhones to fighter jets to wind turbines.<\/p>\n

Like clockwork, Trump reacted by making a Truth Social post threatening 100% tariffs on China <\/strong>by November 1, on top of existing 30% tariffs. That would bring the total to 130%\u2014essentially trying to shut down trade with America\u2019s biggest rival.<\/p>\n

The October 10 announcement hammered markets:<\/strong><\/p>\n

    \n
  • S&P 500<\/strong> and the Nasdaq <\/strong>saw their worst day since April<\/li>\n
  • Bitcoin\u2019s <\/strong>crash to $109,800 triggered a $19-billion wipeout in 24 hours. That\u2019s the largest crypto liquidation event in history!<\/li>\n
  • Gold<\/strong> surged above $4,000\/oz as investors fled to safety<\/li>\n
  • The U.S. dollar<\/strong> dipped while safe-haven bonds<\/strong> rallied<\/li>\n<\/ul>\n

    Analysts said if traders weren\u2019t still betting on the TACO trade working again, stocks would\u2019ve fallen way more\u2014maybe 10% instead of 2.7%. The market was cushioned by hope that Trump would back down like always.<\/p>\n

    Since then, U.S.-China trade relations have shown little signs of easing:<\/p>\n

      \n
    • On October 12 (Sunday)\n
        \n
      • China\u2019s<\/strong> Commerce Ministry accused the U.S. of a \u201ctextbook double standard,\u201d saying it didn\u2019t want a trade war but isn\u2019t afraid of one<\/li>\n
      • Trump<\/strong> posted, \u201cDon\u2019t worry about China, it will all be fine!,\u201d <\/em>and called President Xi \u201chighly respected\u201d<\/li>\n<\/ul>\n<\/li>\n
      • On October 14 (Tuesday)\n
          \n
        • China<\/strong> levied port\/docking fees on U.S.-owned, operated, built or flagged vessels but clarified that Chinese-built ships would be exempted from the levies<\/li>\n
        • Trump<\/strong> called China\u2019s not buying U.S. soybeans an \u201cEconomically Hostile Act,\u201d and threatened to not buy China\u2019s cooking oil<\/li>\n<\/ul>\n<\/li>\n
        • On October 15 (Thursday)\n
            \n
          • US Treasury Secretary Scott Bessent hinted at pausing import duties<\/strong> on Chinese goods for longer than three months if China halts its plan for strict new export controls on rare-earth elements<\/li>\n
          • Bessent floated the idea of a \u201cgroup response<\/strong>\u201d and will be speaking with \u201cEuropean allies, with Australia, with Canada, with India and the Asian democracies,\u201d at the IMF and World Bank meeting this week<\/li>\n
          • Bessent still confirmed Trump \u201cis a go\u201d on meeting Xi later this month<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n

            Will TACO Work This<\/em> Time?<\/h2>\n

            Trump writing \u201cDon\u2019t worry about China, it will all be fine!<\/em>\u201d just two days after his threat suggests he\u2019s looking for an exit.<\/p>\n

            But here\u2019s the crucial difference: This time, China may be holding the cards, not Trump.<\/strong><\/p>\n

            China may not be bluffing with rare earths. As everyone is highly aware of, China controls the arteries of high-tech civilization. The U.S. literally<\/em> cannot build advanced technology without them, and there\u2019s no quick replacement.<\/p>\n

            Trump may have picked a fight where he doesn\u2019t hold the leverage.<\/p>\n

            What worked before:<\/strong> Trump had the power. He could threaten tariffs, watch markets panic, then reverse course when things got ugly. Traders made money by betting on his pattern of backing down.<\/p>\n

            What\u2019s different now:<\/strong> China controls resources America badly needs. China targeted the one thing America can\u2019t afford to lose access to.<\/p>\n

            What happens next:<\/strong> Watch the November 1 deadline. If Trump delays or reduces the tariff, TACO lives on and markets rally. If the full 100% tariffs kick in, we\u2019re in uncharted waters.<\/p>\n

            Key Lessons for Traders<\/h2>\n

            The pattern isn\u2019t guaranteed.<\/strong> Just because something worked before doesn\u2019t mean it works forever. Markets adapt, circumstances change, and patterns break.<\/p>\n

            Leverage kills.<\/strong> The crypto market\u2019s $19 billion liquidation showed how borrowed money turns dips into disasters. If you\u2019re using high leverage to bet on TACO working again, you\u2019re playing with fire.<\/p>\n

            Context matters.<\/strong> Early TACO trades worked because Trump controlled the situation. Now China holds power Trump doesn\u2019t have. Same president, different chess board.<\/p>\n

            Risk management is everything.<\/strong> Whether TACO works once more or breaks completely, position sizing and stop losses aren\u2019t optional\u2014they\u2019re survival tools when policies change via social media posts.<\/p>\n

            The TACO trade taught Wall Street that Trump\u2019s bark is often worse than his bite. But October taught us something else: Even reliable patterns eventually meet their match.<\/strong><\/p>\n

            Smart traders are watching November 1 closely. The rest are about to learn an expensive lesson about assuming patterns last forever.<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

            If you\u2019ve been keeping an eye on the markets this year, you know it\u2019s been a roller coaster, and it\u2019s not just from central bank policy shifts or assets hitting record levels. I\u2019m talking about times when U.S. President Trump announces huge tariffs and markets tumble, only for him to walk it back days later<\/p>\n","protected":false},"author":2,"featured_media":3256,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-3255","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-news"],"featured_image_urls":{"full":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/10\/3255-taco-trade-thumb-final-780x493.png",780,493,false],"thumbnail":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/10\/3255-taco-trade-thumb-final-780x493-150x150.png",150,150,true],"medium":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/10\/3255-taco-trade-thumb-final-780x493-300x190.png",300,190,true],"medium_large":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/10\/3255-taco-trade-thumb-final-780x493-768x485.png",640,404,true],"large":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/10\/3255-taco-trade-thumb-final-780x493.png",640,405,false],"1536x1536":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/10\/3255-taco-trade-thumb-final-780x493.png",780,493,false],"2048x2048":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/10\/3255-taco-trade-thumb-final-780x493.png",780,493,false],"morenews-featured":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/10\/3255-taco-trade-thumb-final-780x493.png",780,493,false],"morenews-large":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/10\/3255-taco-trade-thumb-final-780x493.png",780,493,false],"morenews-medium":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/10\/3255-taco-trade-thumb-final-780x493-590x410.png",590,410,true],"crawlomatic_preview_image":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/10\/3255-taco-trade-thumb-final-780x493-231x146.png",231,146,true]},"author_info":{"display_name":"henry","author_link":"https:\/\/ft365.org\/index.php\/author\/henry\/"},"category_info":"Latest News<\/a>","tag_info":"Latest News","comment_count":"0","_links":{"self":[{"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/posts\/3255","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/comments?post=3255"}],"version-history":[{"count":0,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/posts\/3255\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/media\/3256"}],"wp:attachment":[{"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/media?parent=3255"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/categories?post=3255"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/tags?post=3255"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}