Is the ‘TACO trade’ still a winning bet in 2026, or are investors about to get burned again? |
2025 was the year that a new acronym entered financial markets. TACO, or Trump Always Chickens Out, became the theme of a year rocked by tariff drama.
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Following the TACO process seemed to offer a way to benefit from the uncertainty created by the US president’s shifting approach to tariffs.
The US administration established a pattern that saw the imposition of high tariffs, creating panic in markets, before reversing course and announcing a pause on those tariffs, with Donald Trump able to report that the target countries had rushed to make a deal that would benefit the United States.
Wearisome global trade experts were forced to point out, repeatedly, that these rapid-fire deals did not constitute real trade agreements, which take years of hard negotiations, but markets did not care. They were simply glad to see that the prospect of damaging trade wars had been averted.
IG analysis of investor behaviour showed that buying tariff-driven dips would have narrowly........