The “TACO Trade” — an acronym for “Trump Always Chickens Out” — delivered another payday for Wall Street on Wednesday as President Donald Trump abruptly withdrew his latest round of tariff threats.
The reversal followed a chaotic 48 hours that saw global markets plunge on Tuesday after Trump threatened to slap 10% to 25% tariffs on eight European allies unless they supported his bid to acquire Greenland.
- The QQQ moved sharply higher. See the chart and details here.
On Wednesday afternoon, the president said the planned tariffs on European Union countries will no longer take effect, following what he described as a “very productive” meeting with NATO Secretary General Mark Rutte.
TACO Trade
On Tuesday, as the Dow Jones suffered an 870-point rout and the S&P 500 erased its 2026 gains, the TACO strategy went into full effect.
Brave investors bought the dip on the assumption that Trump would “chicken out” or withdraw his tariff threats before the deadline.
The TACO trade gamble paid off on Wednesday afternoon when Trump reversed course and sent the market soaring.
Experts React
Market analysts like Gary Black were quick to point out the pattern.
“It’s good to see the TACO trade is alive and well … For nine months now, the TACO (“Trump Always Chickens Out”) trade has proven a reliably winning one on Wall Street,” Black said in a social media post.
Joe Brusuelas, chief economist at RSM, also showed his appreciation for the TACO trade, saying that he was having tacos for dinner.
Gina Bolvin, president of Bolvin Wealth Management Group, said it is not surprising that “once again, buy-the-dip has proven to be a solid investment strategy.”
Bolvin also highlighted the strength of the rally and the likelihood of the bull market to continue.
“The market rally is broadening, which is a hallmark of a healthy market. It’s no wonder investors keep buying the dip — Don’t blink or you’ll miss it,” Bolvin said.
Markets React
All three major indexes immediately moved sharply higher following Trump’s reversal of the tariff threat.
The Dow Jones, as tracked by the SPDR Dow Jones Industrial Average ETF (NYSE:DIA), ended Wednesday’s session up 1.22% and the Nasdaq 100, tracked by the Invesco QQQ Trust (NASDAQ:QQQ) closed 1.18% higher.
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