:max_bytes(150000):strip_icc()/GettyImages-2256963613-48618f4856bb4cf7ae0db71ebb4db977.jpg "After Trump’s Greenland Deal, Wall Street Is Talking Up the ‘TACO Trade’ Again. What’s Next?")
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Key Takeaways
- Stocks rallied after President Trump dialed back his threats against Greenland, reviving talk of the TACO Trade, a strategy intended to exploit the president’s bombastic approach to policy.
- Over the past year, dip-buyers have reliably been rewarded by Trump’s habit of walking back aggressive tariff threats that batter the stock market. But the market has recently taken in stride some events that likely would have presented TACO Trade opportunities last year.
It’s Taco Thursday on Wall Street.
U.S. stocks, which rallied yesterday, were extending their gains Thursday after President Donald Trump said he would not use force to take over Greenland nor impose new tariffs on a group of European nations after the U.S. and NATO reached a “framework of a future deal” on Greenland’s sovereignty.
The détente revived talk on Wall Street of the TACO, or “Trump Always Chickens Out,” concept, which broadly refers to the president’s habit of threatening steep tariffs or other dramatic actions before reducing, delaying, or canceling them. This has inspired the so-called TACO Trade, in which investors buy assets rattled by the president’s threats under the assumption they’ll eventually rebound.
Why This Is Important
The stock market climbed to a series of record highs last year, and has continued to rise in 2026, despite heightened uncertainty stemming from President Trump’s fast-moving politics. In part, the gains have been fueled by investors’ belief in a pattern in the president’s approach to dealmaking.
“TACO” entered Wall Street’s lexicon via Financial Times columnist Robert Armstrong. “The US administration does not have a very high tolerance for market and economic pressure, and will be quick to back off when tariffs cause pain,” wrote Armstrong in May as stocks rebounded from the carnage of “Liberation Day.”
Later that month, Trump appeared to confirm Armstrong’s theory. Stocks soared on May 12 after the U.S. and China agreed to a 90-day pause on tariffs exceeding 100%, and jumped again weeks later when Trump announced a similar pause on tariffs targeting the EU.
Is there a strategy for investors here? “Put simply, TACO = BTD,” or “buy the dip,” wrote Michael Brown, senior research strategist at Pepperstone, at the time of that second tariff retreat. Doing so was a profitable strategy last year: The S&P 500 climbed more than 37% between its April lows and the end of 2025.
“Investors should not be surprised that, once again, buy-the-dip has proven to be a solid investment strategy,” wrote Gina Bolvin, president of Bolvin Wealth Management Group, on Wednesday.
TACO traders nonetheless face something of a paradox. The trade relies on panic, which gives investors an opportunity to buy stocks “on sale” and, according to the theory, induces Trump to change course. But panic often stems from uncertainty, and investors appear more and more certain that Trump’s reversals are inevitable.
A year into Trump’s second term, investors have grown more comfortable—or less uneasy—with his sledgehammer tactics. Lately, actions that might have ravaged markets last year have elicited shrugs, with stocks generally moving ever higher.
The U.S. capture of Venezuelan President Nicolás Maduro earlier this month ratcheted up uncertainty on Wall Street, but the Dow Jones Industrial Average rose to a record high. Gold, a safe haven, and stocks, a risk asset, both hit records last Monday following news the Justice Department opened an investigation into Fed Chair Jerome Powell, an unprecedented escalation in the president’s quest to control the independent central bank.
Some of that may suggest that investors are done reacting strongly to trade policy, which has been found ultimately to be less draconian than first thought—something investors noted last year. “It is becoming increasingly clear that the market is losing interest, or at least is much less sensitive, to new developments on the trade front,” wrote Douglas Porter, chief economist at BMO Capital Markets, in July.
This week’s back-and-forth over Greenland demonstrated that Trump can still take the stock market for a ride. Trump’s relationship with Wall Street remains unpredictable enough to keep tacos on the menu for the foreseeable future.
