Trump’s trade tactics and the rise of 'TACO' diplomacy

Audio report: written by reporters, read by AI

Park Hyun-young

The author is a senior economic reporter at the JoongAng Ilbo.

A new term has emerged to describe the pattern of U.S. President Donald Trump’s trade negotiations: TACO, short for “Trump Always Chickens Out.” First coined by Financial Times columnist Robert Armstrong in May, the acronym refers to Trump’s tendency to announce aggressive trade actions, only to soften or delay them soon after.

Armstrong observed a recurring pattern. When Trump unveils high tariffs, markets react negatively, often with steep drops in major indices. Not long after, the administration hints at a delay or willingness to negotiate, prompting a market rebound. Armstrong’s theory suggests that Trump’s administration lacks the resolve to endure prolonged market turmoil or broader economic fallout, resulting in repeated reversals — or what has come to be known on Wall Street as the “TACO effect.”

One of the clearest examples came on April 2, when Trump announced sweeping reciprocal tariffs on nearly all global trading partners, dubbing it the “Liberation Day Tariff.” The Dow Jones Industrial Average plunged more than 5 percent in a single day and dropped 12.4 percent over four trading sessions. Facing market panic, the White House quickly declared a 90-day delay in implementation. As the deadline approached, the tariff start date was pushed back again, from July 9 to August 1. The cycle repeated itself.

Initially, the TACO theory circulated among Wall Street investors to explain how market volatility and policy adjustments were intertwined. As the term spread more widely, it began to portray Trump as unpredictable, even timid — a perception reinforced by the phrase’s vivid imagery of “chickening out.”

Yet this interpretation may overlook a deeper strategic dimension. Trump’s apparent backtracking could be viewed as responsiveness to shifting circumstances. Delaying or moderating a policy in response to market turbulence is not necessarily a sign of weakness, but an attempt to balance political objectives with economic realities.

Trump’s goal has consistently been to pressure countries that, in his view, have long benefited from unfair trade with the United States. Through high tariffs, he aims to bring back manufacturing jobs and extract better terms. But such measures risk triggering inflation, job losses and stock market declines. TACO-style delays allow the administration to sustain tariff pressure without undermining the broader economy. They also buy time for businesses to adapt and, in some cases, soften the blow during sensitive economic periods such as the upcoming holiday season.

There is also a calculated diplomatic purpose. Resetting tariff deadlines keeps trade partners under pressure to make concessions. The ability to change the rules at will reinforces Trump’s leverage. Delaying tariffs after threatening steep hikes becomes a negotiation tactic designed to strengthen the United States’ bargaining position.

TACO also offers insight into Trump’s decision-making process. Before the most recent delay to Aug. 1, officials from the Commerce Department and U.S. Trade Rep. reportedly warned the White House that there wasn’t enough time to complete talks. Trump accepted the recommendation. This suggests that, contrary to his image as a unilateral decision-maker, the president does consult his aides and listens to their input, at least on occasion.

There are also practical reasons behind the recurring TACO pattern. When Trump announced the original 90-day delay in April, he set an ambitious goal: “90 deals in 90 days.” The logic was that nations facing the prospect of harsh tariffs would rush to negotiate, eager to avoid economic damage. But reality has not kept pace with rhetoric.

To date, the White House has only confirmed two deals — one with Britain and one with Vietnam. And even these fall short of comprehensive trade agreements.

The British deal, announced in May, involved lowering tariffs on British cars from 27.5 percent to 10 percent and expanding access for U.S. beef exports. However, both sides acknowledged that major issues still needed to be resolved in future talks. The second deal, reached with Vietnam earlier this month, reportedly includes a plan to reduce tariffs on Vietnamese goods from 46 percent to 20 percent. Yet no detailed, formalized agreement has been released.

These cases suggest that what qualifies as a “deal” under Trump’s administration varies widely — and is often more symbolic than substantive. With about 20 days left before the next tariff deadline, the focus may need to shift from achieving robust trade agreements to crafting agreements that align with Trump’s strategic messaging.

In this environment, negotiating with Washington requires more than just economic rationale — it demands an understanding of the political theater at play. The TACO phenomenon, far from being a sign of weakness, may instead reflect a deliberate tactic to maintain pressure, shape public perception and keep both markets and partners guessing.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.