Trump suspends tariffs, triggering Wall Street's taco trades

On May 24, 2025, President Donald Trump imposed a hefty 50% tariff on goods from the European Union, set to take effect on June 1. This abrupt move caused a negative reaction in the stock markets, with major indices like the S&P 500 dropping by 0.7%, the Dow Jones Industrial Average by 0.6%, and the Nasdaq Composite by 1%. The fall in stock prices reflected the market's concern regarding the anticipated economic impact of the tariffs. Just days later, Trump shifted his approach, deciding to delay the implementation of these tariffs until July 9. By doing so, he aimed to negotiate a new trade deal with the EU, leading to a recovery in stock prices, which rose notably the following week. The S&P 500 gained 2.1% on May 27, indicating that suspension of the tariff reassured investors. In light of these developments, Wall Street coined the term 'TACO trades' – short for 'Trump Always Chickens Out' – to mock the market rallies resulting from Trump's tariff suspensions. As the President learned about this term, he expressed disbelief at reporters who asked about it, stating that it was unfair to characterize his actions in such a way. Trump's back-and-forth with tariffs is part of his broader strategy, which he described as negotiation. He mentioned that he typically faces the opposite criticism, being labeled too tough.