In May 2025, weeks after U.S. President Donald Trump announced and hit pause on his Liberation Day Tariffs, a Financial Times columnist came up with a name for how the market has been behaving ever since Trump came into office.

He called it "TACO," or the "Trump Always Chickens Out" theory.

The catchphrase and slang acronym became a recurring in-joke on Wall Street and quickly evolved into a serious investment strategy.

Yesterday, President Trump heard about the meme firsthand and didn't handle it too well. Here's a recap of what a "TACO" trade is, and why hearing about it ticked off the President.

What Does "TACO" Stand For and Who Coined the Acronym?

"TACO" or "Trump Always Chickens Out" is an acronym coined by Financial Times columnist Robert Armstrong in his May 2nd, 2025, article, titled "The US market's surprise comeback and the rise of the 'Taco' trade theory."

The piece detailed how investors had started treating Trump’s dramatic policy announcements as noise, especially his frequent threats of tariffs on major trade partners. Armstrong observed a growing belief among traders that Trump would ultimately back off from decisions that spooked the markets.

The theory emerged in response to April 2025’s "Reciprocal Tariffs" kerfuffle, which saw Trump threaten harsh penalties on the European Union and China, only to quietly hit pause days later.

In a May 12th, 2025, tweet, Gideon Rachman, chief foreign affairs commentator for FT, wrote, "Reverse ferret on tariffs is an illustration of my colleague @rbrtrmstrng infallible Taco rule: Trump always chickens out."

Financial experts like Rachman were some of the first to see a pattern form and had begun incorporating the expectation that Trump would back out of tariff threats into their trading strategies.

How Did the TACO Theory Gain Traction?

Armstrong's acronym quickly became a hot in-joke in the financial world. Within weeks, Financial Times contributor Katie Martin opined on the idea in her May 17th piece titled, "The 'Taco' factor has spurred markets higher," crediting the theory for a "strange, shaky rally." Traders had started betting that President Trump would announce extreme tariffs and then backtrack, boosting markets on the rebound.

The tipping point on the acronym came when Trump, via Truth Social, proposed a 50 percent tariff on the EU starting June 1st, 2025. By May 25th, he'd already delayed the implementation to July 9th. Traders had bet on the backtrack, and they were right.

The TACO theory was no longer niche. Wall Street memed it into existence, with phrases like "TACO Monday" and "TACO Rally" popping up in analyses, X posts and subreddits dedicated to investment advice.

What Was Trump's Reaction to Reporter Mary Cassella Asking Him About the TACO Theory?

On May 28th, 2025, CNBC reporter Mary Cassella asked Trump about the TACO theory during a press Q&A. The exchange went downhill instantly. When Cassella said Wall Street analysts were coining the term "TACO" to describe his habit of backing out of tariffs, Trump misunderstood, then deflected. "I kick out?" he asked. When she clarified, he snapped, "Don't ever say what you said."

Reporter: Wall Street analysts have a new term called the TACO trade.. Saying Trump always chickens out on tariffs… Trump: I kick out?Reporter: Chicken out.Trump: I gave the E.U. a 50% tax tariff. They called up and said, please, let meet right now. You call that… pic.twitter.com/lPQK9iZ70d

— Acyn (@Acyn) May 28, 2025

The New York Times reported the exchange on May 28th, prompting a wave of posts on X. That same day, FT columnist Robert Armstrong reposted the NYT blurb, racking up over 18,000 likes in less than 24 hours.

X user @GalaxyPeaBrain followed with a viral meme pairing Trump and the character Griffith from the manga and anime series Berserk against a plunging stock market graph, captioning it, "Reporter: 'do it or no b----' / Admin passing a 600% tariff tomorrow," earning over 56,000 likes in a day.

Other X users imagined Trump spiraling the world into a global recession purely out of spite, and the phrase, "He should never have learned about TACO," became the unofficial slogan of the day.

What Are Some More Memes About The 'Trump Always Chickens Out' Theory?

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For the full history of #TACO Trade, be sure to check out Know Your Meme's encyclopedia entry for more information.