Trump Reacts to First Question on 'TACO Trade,' Calls It the 'Nastiest Question'

Wall Street has been on a historic roller coaster ride over the last two months as a result of President Donald Trump's on-and-off tariff threats. Investors are now learning to take his statements with a grain of salt and a touch of salsa.

That's because a new sort of transaction is gaining traction: TACO, which stands for Trump Always Chickens Out. In other words, don't be too concerned about Trump's latest tariff threat and go on a selling spree since he'll eventually back down, and a relief rally will follow.

Trump said he learned about the word, created by Financial Times analyst Robert Armstrong, on Wednesday when a reporter asked for his reaction.

"I chickened out?" Oh, I have never heard that before. Do you mean that I decreased China from 145%, which I put at 100, to another number? Trump stated Wednesday, referring to the tariffs he slapped on imported Chinese goods. (The rate is now 30%, after Trump boosted it to 145% last month, much to the dismay of investors, before lowering it a few weeks later.)

Last week, Trump threatened to levy 50% taxes on European Union imports starting June 1. Stocks fell following his ultimatum, which he reiterated later in the day, insisting there was no room for negotiation. Two days later, he said that he would delay imposing a 50% tariff on EU imports until July 9, citing encouraging talks. When US markets resumed after Memorial Day, stocks finished strongly in the green.

Trump claimed he was willing to postpone the action after EU counterparts called him and pleaded, "Please, let's meet right now."

"You call that chickening out?" Trump reacted to a reporter during an Oval Office event on Wednesday, pointing to his recent tariff rate announcements for the EU and China.

"It's called negotiation," Trump said, adding that part of his strategy may include establishing "a ridiculously high number" for tariffs and then lowering it if other countries agree to his requests.

"Don't ever say what you said," Trump told the reporter, describing it as "the nastiest question."

Trump's tariff reversals with China and the EU are far from unique.

On April 2, he announced sweeping "reciprocal" tariffs on dozens of countries, which would go into force on April 9. Hours after they went into effect, he ordered a 90-day moratorium for all affected countries except China, claiming investors were "yippy yappy."

Translation: The US financial markets, notably the bond market, did not take tariff changes well.

Indeed, when he announced the pause, markets had fallen, and the S&P 500 was on the verge of a bear market, while bond yields had risen as investors sold off US paper.

After the delay was announced, the S&P 500 had its best day since October 2008.