In the event you’ve been keeping track of the markets this 12 months, you realize it’s been a curler coaster, and it’s not simply from central financial institution coverage shifts or property hitting document ranges.
I’m speaking about occasions when U.S. President Trump pronounces large tariffs and markets tumble, just for him to stroll it again days later and ship costs hovering once more.
We’ve seen this precise situation play out a number of occasions in simply the previous few months.
It’s occurred so usually that Wall Avenue even turned the chaos into an acronym: TACO, which stands for “Trump All the time Chickens Out.”
It’s not only a meme—it turned an precise buying and selling technique:
Purchase the dip after tariff threats, then promote when Trump inevitably backs down.
For six months, it labored like clockwork.
Till October 2025, when China proved the sample would possibly lastly be damaged.
Let’s TACO-bout it.
The Start of TACO: Liberation Day Goes Sideways
The story begins on April 2, 2025—”Liberation Day.” Trump unveiled large tariffs on over 180 international locations. China obtained hit with 54% tariffs, the EU with 20%, Vietnam with 46%. The market response was savage.
The S&P 500 dropped greater than 10% in three days. Secure haven gold breached $3,150 for the primary time. TRILLIONS of {dollars} vanished. Analysts referred to as it “worse than worst-case situation.”
Then got here the twist: One week later, Trump hit pause. He dropped most tariffs to 10% for 90 days. Markets exploded increased. By Might, all of the losses have been erased.
This sample is repeated all through spring and summer time. NBC Information counted TEN separate occasions Trump threatened tariffs, then backed down. Europe, China, Colombia—similar story each time. Huge threats, market selloff, then retreat.
Monetary Occasions gave it a reputation in Might: the “TACO concept—Trump All the time Chickens Out.” California Governor Gavin Newsom joked, “It’s raining tacos immediately” after a courtroom struck down some tariffs.
The buying and selling playbook was useless easy: When Trump pronounces tariffs and shares tank, purchase. When he backtracks and markets rally, promote.
Rinse, repeat, revenue.
TACO Meets Actuality: China’s Uncommon Earth Energy Play
Quick-forward to October 9, 2025. China introduced that beginning December 1, corporations would want particular licenses to export something with uncommon earth minerals in it.
This can be a BFD, as China controls over 90% of the world’s processed uncommon earths, supplies crucial for every little thing from iPhones to fighter jets to wind generators.
Like clockwork, Trump reacted by making a Reality Social put up threatening 100% tariffs on China by November 1, on prime of current 30% tariffs. That might deliver the full to 130%—basically attempting to close down commerce with America’s greatest rival.
The October 10 announcement hammered markets:
Greenback Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
- S&P 500 and the Nasdaq noticed their worst day since April
- Bitcoin’s crash to $109,800 triggered a $19-billion wipeout in 24 hours. That’s the most important crypto liquidation occasion in historical past!
- Gold surged above $4,000/oz as buyers fled to security
- The U.S. greenback dipped whereas safe-haven bonds rallied
Analysts mentioned if merchants weren’t nonetheless betting on the TACO commerce working once more, shares would’ve fallen far more—perhaps 10% as an alternative of two.7%. The market was cushioned by hope that Trump would again down like at all times.
Since then, U.S.-China commerce relations have proven little indicators of easing:
- On October 12 (Sunday)
- China’s Commerce Ministry accused the U.S. of a “textbook double normal,” saying it didn’t desire a commerce warfare however isn’t afraid of 1
- Trump posted, “Don’t fear about China, it is going to all be tremendous!,” and referred to as President Xi “extremely revered”
- On October 14 (Tuesday)
- China levied port/docking charges on U.S.-owned, operated, constructed or flagged vessels however clarified that Chinese language-built ships could be exempted from the levies
- Trump referred to as China’s not shopping for U.S. soybeans an “Economically Hostile Act,” and threatened to not purchase China’s cooking oil
- On October 15 (Thursday)
- US Treasury Secretary Scott Bessent hinted at pausing import duties on Chinese language items for longer than three months if China halts its plan for strict new export controls on rare-earth parts
- Bessent floated the concept of a “group response” and can be talking with “European allies, with Australia, with Canada, with India and the Asian democracies,” on the IMF and World Financial institution assembly this week
- Bessent nonetheless confirmed Trump “is a go” on assembly Xi later this month
Will TACO Work This Time?
Trump writing “Don’t fear about China, it is going to all be tremendous!” simply two days after his risk suggests he’s searching for an exit.
However right here’s the essential distinction: This time, China could also be holding the playing cards, not Trump.
China is probably not bluffing with uncommon earths. As everybody is extremely conscious of, China controls the arteries of high-tech civilization. The U.S. actually can not construct superior expertise with out them, and there’s no fast substitute.
Trump might have picked a battle the place he doesn’t maintain the leverage.
What labored earlier than: Trump had the facility. He might threaten tariffs, watch markets panic, then reverse course when issues obtained ugly. Merchants made cash by betting on his sample of backing down.
What’s totally different now: China controls sources America badly wants. China focused the one factor America can’t afford to lose entry to.
What occurs subsequent: Watch the November 1 deadline. If Trump delays or reduces the tariff, TACO lives on and markets rally. If the total 100% tariffs kick in, we’re in uncharted waters.
Key Classes for Merchants
The sample isn’t assured. Simply because one thing labored earlier than doesn’t imply it really works ceaselessly. Markets adapt, circumstances change, and patterns break.
Leverage kills. The crypto market’s $19 billion liquidation confirmed how borrowed cash turns dips into disasters. In the event you’re utilizing excessive leverage to wager on TACO working once more, you’re taking part in with hearth.
Context issues. Early TACO trades labored as a result of Trump managed the scenario. Now China holds energy Trump doesn’t have. Similar president, totally different chess board.
Threat administration is every little thing. Whether or not TACO works as soon as extra or breaks fully, place sizing and cease losses aren’t non-compulsory—they’re survival instruments when insurance policies change through social media posts.
The TACO commerce taught Wall Avenue that Trump’s bark is commonly worse than his chew. However October taught us one thing else: Even dependable patterns ultimately meet their match.
Sensible merchants are watching November 1 carefully. The remainder are about to be taught an costly lesson about assuming patterns final ceaselessly.
