There is a view circulating on Wall Street that Trump is ultimately unwilling to truly implement extreme tariff threats. This kind of argument greatly annoyed Trump. He insisted that his seemingly retreating move was actually an important part of the trade compromise strategy. Trump said straightforwardly, “This is called negotiation.” He further explained that as part of the negotiation strategy, he would deliberately “set an ridiculously high figure” and then “lower it slightly”.
At an event in the Oval Office, Trump was asked to respond to reports of the so-called “TACO” deal. “TACO” is a short form of “Trump Always Chickens Out”, meaning “Trump always backs down at the last minute”. Under this trading model, investors will buy at a low price when Trump’s tariff threats cause the market to fall, wait for him to finally ease his tone, and then profit from the stock market rebound.
Since its introduction, Trump’s tariff policy has been full of uncertainties and drama. Take the recent tariff measures against the EU as an example. Last Friday (May 23rd, US time), Trump posted on social media, suggesting that a tariff of up to 50% be imposed on the EU starting from June 1st. This news immediately triggered sharp fluctuations in the global financial market, and the US suffered a “triple blow” in stocks, bonds and foreign exchange. The S&P 500 index plunged by 2.6%. However, the plot took a dramatic turn on Sunday night (the 25th). Trump announced on social media that at the request of EU President Ursula von der Leyen, he agreed to postpone the implementation of the 50% tariff until July 9th.
Trump also defended himself by the reaction of the European Union, saying: “After I took action, they said, ‘We can meet whenever you want.'” He believes that it is precisely his seemingly tough tariff threat that has driven the progress of trade negotiations between the United States and Europe. Previously, US Treasury Secretary Basent has also repeatedly defended Trump’s tariff policy, claiming that using “strategic uncertainty” in trade negotiations with other countries is Trump’s negotiation strategy.
Trump’s response to the “TACO” deal this time not only reflects his insistence on his own trade policy, but also highlights the differences in his understanding of trade strategies with Wall Street. In Trump’s view, Wall Street misunderstood his tariff policy and failed to understand the complex negotiation logic behind it. From the perspective of Wall Street, the frequent changes in Trump’s tariff policy have indeed brought great uncertainty to the market, giving rise to trading models like the “TACO deal” that attempt to profit from policy fluctuations. With the continuous evolution of US trade policies, this conceptual collision between Trump and Wall Street, as well as the impact it has on the market, deserve continuous attention.
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