Wall Street loves a catchy acronym, and the “TACO trade” has captured the mood, as investors and analysts attempt to make sense of the roller-coaster market action that has followed President Donald Trump’s sweeping tariff threats and subsequent walk-backs.

Investors are beginning to realize that Trump never follows through on his tariff threats, inspiring the TACO trade: 'Trump always chickens out'

Ongoing US-China trade tensions and volatile policy shifts have left investors caught between betting on tariff deescalations and bracing for increased uncertainty.