Posted By By Alain Guillot
Special to Financial Independence Hub
Wall Street has been on a wild ride in recent months, and the cause isn’t some unknown geopolitical threat or economic collapse: it’s the unpredictable tariff threats from U.S. President Donald Trump.
In response to Trump’s repeated habit of threatening tariffs only to later walk them back, traders have coined a new acronym: TACO, short for “Trump Always Chickens Out.” The term, first popularized by Financial Timescolumnist Robert Armstrong, has become a strategy among investors: when Trump threatens tariffs, markets drop: but savvy traders anticipate a retreat and buy the dip, profiting from the inevitable rebound.
Trump, for his part, is not pleased with the nickname. In a recent Oval Office appearance, he rejected the idea that his constant backtracking reflects weakness, calling it a negotiation strategy. According to him, he often starts with an exaggerated number (such as a 145% tariff on Chinese goods) and then drops it during talks with foreign governments to create leverage.
Let’s be clear: negotiation is part of diplomacy and trade. But weaponizing tariffs in this on-again, off-again manner creates unnecessary chaos in global markets and harms businesses and consumers who are left guessing about what prices they will face or what products will become harder to obtain.
Why I don’t think Tariffs are a good tool for Prosperity
As a personal finance blogger and former financial advisor, I believe strongly in policies that promote long-term stability and broad-based prosperity. Tariffs, in theory, are designed to protect domestic industries from unfair foreign competition. But in practice — especially when used impulsively and inconsistently like we’ve seen under Trump — they often backfire.
Here’s why I personally don’t think tariffs are a great tool for building prosperity:
- They raise prices for consumers. When tariffs are imposed, companies pass the extra cost down the line. That means your groceries, electronics, and clothing become more expensive: not because the market demands it, but because politicians created artificial barriers.
- They create uncertainty. Markets hate unpredictability. Business owners delay hiring and investments. Global supply chains get disrupted. Investors pull back. And this doesn’t just hurt “Wall Street”: it hurts jobs, wages, and retirement portfolios.
- They invite retaliation. When one country slaps tariffs on another, the response is often tit-for-tat. That hurts exporters: many of which are small- and medium-sized businesses that rely on access to foreign markets to grow.
- They don’t solve the real problems. The problems Trump tried to fix — trade imbalances, intellectual property theft, and global competition — require structural reforms, not economic blunt force. Tariffs don’t build new factories or train new workers. They just reshuffle trade patterns and inflate costs.
The TACO Trade: A Symptom of Deeper Problems
What the TACO trade really reveals is a lack of confidence in long-term policy direction. Traders aren’t reacting to a coherent strategy; they’re reacting to volatility. They’re profiting from the noise, not from economic fundamentals.
That should concern all of us.
Because underneath every market spike and drop are real people: retirees whose pensions are invested in equities, small business owners managing thin margins, and consumers already squeezed by inflation.
Tariff threats may look tough in a press conference, but if they’re constantly reversed, they’re not tough—they’re just disruptive. And when disruption becomes predictable, it’s no longer a tool of leverage: it becomes a meme.
Final Thoughts
As someone who cares deeply about financial stability, opportunity, and growth, I find it hard to support tariffs as a path to prosperity. History shows us that free and fair trade, not protectionism, lifts more people out of poverty and creates more wealth for everyone.
The TACO phenomenon might be amusing in the short term, but it’s a flashing warning sign about how economic policy is being handled. We deserve better—not just as investors, but as citizens of an interconnected global economy.
Alain Guillot is a part time event photographer, part time Salsa teacher, and part time personal finance blogger. He came to Quebec as an immigrant from Colombia. Due to his mediocre French he was never able to find a suitable job, so he opened a Salsa/Tango dance school and started his entrepreneurship journey. Entrepreneurship got him started into personal finance and eventually into blogging. Now he lives a Lean FIRE lifestyle and shares his thoughts in his blog AlainGuillot.com. This blog appeared first on his blog and is republished here with permission.
