Some investors have begun engaging in what The Financial Times described as the “TACO” trade, short for “Trump Always Chickens Out” as renewed tensions arise between the United States and China following President Donald Trump’s latest tariff announcement.
The U.S. president announced plans to impose a 100% tariff on Chinese imports, citing Beijing’s export controls on rare earth elements as the key reason behind the move. Trump made the declaration on his social media platform, stating that the tariffs will take effect starting November 1, 2025, or earlier “depending on any further actions or changes taken by China.”
This latest statement builds on an earlier post from Friday on Truth Social, where Trump suggested that “there seems to be no reason” to meet with Chinese President Xi Jinping during his upcoming trip to South Korea. The meeting had been expected to take place ahead of the Asia-Pacific Economic Cooperation (APEC) summit, with other scheduled stops in Malaysia and Japan.
While Trump did not officially cancel the potential meeting with Xi, his remarks have cast doubt on whether the two leaders will hold talks during the Asian tour. The president’s tone was firm, but market analysts remain cautious, noting that Trump has a history of backing down from aggressive trade measures hence the rise of the so-called “TACO” trade among investors betting on his eventual reversal.
China, meanwhile, has maintained a defiant stance. Officials in Beijing have repeatedly asserted that the country “cannot be bullied by any nation” and signaled readiness to respond with countermeasures if the United States follows through with the tariff escalation.
In previous trade disputes, China retaliated by increasing tariffs on American goods until Washington eased restrictions, a cycle that analysts say could repeat if Trump’s latest threat materializes.
