The “Taco Trump” phenomenon has taken Wall Street by storm in 2025, sparking a new investment strategy that’s both catchy and controversial. Coined by a Financial Times columnist, the term TACO—standing for “Trump Always Chickens Out”—describes a pattern where President Donald Trump announces aggressive tariff policies, markets plummet, and then rebound when he backtracks. Just this week, on May 28, 2025, Trump bristled at a reporter’s question about the Taco Trump trade, calling it a “nasty” label while defending his tariff strategy as negotiation. This market meme has investors buzzing, with some capitalizing on the dips and others questioning its longevity.
The Rise of the Taco Trump Trade
The Taco Trump trade emerged from a volatile start to Trump’s second term. Investors noticed a recurring cycle: Trump threatens steep tariffs, like the 50% levy on European Union goods announced for June 1, 2025, causing stocks to nosedive. Days later, he delays or softens these tariffs, as seen when he pushed the EU tariffs to July 9, prompting a 2% S&P 500 rally on May 27, 2025. This pattern repeated earlier with the “Liberation Day” tariffs on April 2, which tanked the S&P 500 by 12% before a 90-day pause sparked one of its best days in decades.
Wall Street traders have embraced this cycle, dubbing it the Taco Trump strategy. They buy stocks during the tariff-induced dips, betting on Trump’s eventual retreat. The term has spread like wildfire, with social media posts and memes amplifying its popularity among retail investors.
Key Examples of the Taco Trump Trade in Action
- April 2, 2025: Trump’s “Liberation Day” tariffs hit global markets, causing a 12% S&P 500 drop.
- April 9, 2025: A 90-day tariff pause triggers a massive rally, the S&P 500’s best in nearly 20 years.
- May 26, 2025: Trump delays 50% EU tariffs to July 9, leading to a 2% market rebound.
Why Taco Trump Resonates with Investors
The Taco Trump label isn’t just a clever acronym; it reflects a shift in how investors view Trump’s policies. Unlike the earlier “Trump trade,” which banked on deregulation and tax cuts, the Taco Trump trade hinges on skepticism. Investors believe Trump’s tariff threats are more about negotiation than policy permanence. When he announced 145% tariffs on Chinese goods in April, markets crashed, but his reduction to 30% a month later fueled a recovery. This pattern has led traders to see tariff threats as buying opportunities.
Some analysts, like Eric Sterner of Apollon, argue Trump uses the stock market as a scorecard. His quick retreats after market sell-offs suggest he’s sensitive to financial backlash. Yet, Trump insists this is strategic, claiming on May 28, 2025, that his high tariff threats force other nations to negotiate. Investors, however, remain unfazed, with many now anticipating these reversals and profiting from the volatility.
Risks and Rewards of the Taco Trump Strategy
The Taco Trump trade offers short-term gains but carries risks. Buying the dip has worked recently, with retail investors jumping in at historic levels. However, analysts warn that if tariff delays expire without trade deals—such as the EU negotiations set for July 2025—the market could face a severe downturn. A prolonged trade war might push the U.S. economy into recession, as Sterner noted, though he considers this unlikely.
The strategy also assumes Trump’s pattern will hold. If he follows through on a major tariff, the Taco Trump trade could falter, leaving investors exposed. For now, the meme’s popularity drives its success, with social media amplifying the buzz through GIFs and videos mocking Trump’s tariff flip-flops.
What’s Next for Taco Trump?
As summer 2025 approaches, the Taco Trump trade faces a critical test. Will Trump continue his pattern of backing down, or will he double down on tariffs? The EU and China negotiations loom large, with outcomes likely to shape market sentiment. Investors are also watching legal developments, as a U.S. Court of International Trade ruling on May 28, 2025, blocked some of Trump’s tariffs, suggesting external checks might limit his trade war.
For now, the Taco Trump meme remains a Wall Street darling, blending humor with hard-nosed investing. Traders are riding the wave, but caution lingers. The market’s rollercoaster ride shows no signs of slowing, and only time will tell if this strategy holds up.
Stay Ahead of the Taco Trump Trade
Want to navigate the ups and downs of the Taco Trump market? Follow real-time financial news and join investor forums to stay informed. Share your thoughts on this meme trade below—what’s your take on Trump’s tariff tactics?