By Gustavo de Arístegui.
May 31, 2025
Analysis of the TACO Negotiation Tactic (Trump Always Chickens Out)
1. Definition and Origin of the TACO Tactic
Context: The term “TACO” (Trump Always Chickens Out) was coined by Financial Times columnist Robert Armstrong in an article on May 2, 2025, according to reports from The New York Times and CNN. It describes a pattern in Trump’s negotiation strategy: announcing extremely high tariff rates that cause turbulence in global markets, only to retract or soften them shortly afterward, leading to a market recovery.
Recent examples include the threat of a 50% tariff on the European Union (EU) on May 23, which was postponed to July 9 (Reuters, The Wall Street Journal), and the reduction of tariffs on China from 145% to 30% after negotiations (CNBC).
Analysis: According to The Guardian and Politico, the TACO tactic is based on creating pressure through maximalist proposals, using uncertainty to force quick concessions from trading partners. The Wall Street Journal points out that Trump uses these threats like a “game of chicken,” where the goal is to intimidate the other side into giving in before the measures take effect.
However, The New York Times and Financial Times criticize this strategy for creating economic instability, as markets increasingly anticipate that Trump will not follow through on his threats, weakening his credibility. El Confidencial highlights that this approach reflects a mix of improvisation and calculation, with Trump pursuing quick wins to bolster his domestic image, even at the cost of long-term trade relationships.
2. Mechanism and Examples of the TACO Tactic
Context: According to CNBC and CBS News, the TACO tactic operates in three phases:
- Trump announces draconian tariffs (for example, 145% on Chinese goods in April 2025 or 50% on the EU in May);
- markets fall due to uncertainty (The New York Times reports a 0.67% drop in the S&P 500 on May 23 after the EU threat);
- Trump backs down, either postponing (tariffs on the EU delayed to July, per Reuters) or reducing the rates (China to 30% on May 12, according to Bloomberg).
This then leads to a stock market rebound, such as the 2.1% rise in the S&P 500 on May 27 (CBS News).
Specific Cases:
- China: In April 2025, Trump imposed 145% tariffs on Chinese goods, sparking fears of a global recession (The Wall Street Journal). After negotiations, he reduced the tariffs to 30% for 90 days, which the South China Morning Post described as a tactical win for China, which responded with reciprocal 10% tariffs.
- EU: On May 23, Trump threatened a 50% tariff on European goods but postponed it to July 9 after Ursula von der Leyen offered negotiations on mutual tariff reductions (Financial Times, The Telegraph).
- Canada: According to The Globe and Mail, Trump threatened 25% tariffs on Canadian goods in April but paused them after a month, drawing criticism for unpredictability.
Analysis: Axios and The Washington Post argue that the TACO tactic aims to maximize psychological pressure, forcing trading partners to negotiate quickly. However, The Guardian and El País note that this strategy yields diminishing returns: trading partners, aware of the pattern, expect the retractions, weakening Trump’s bargaining position.
Die Welt notes that the EU and China have learned to respond with moderate proposals, knowing Trump will yield to avoid economic damage. The Hindu warns that countries like India, hit with 10% tariffs in 2025, might seek alliances with China if unpredictability persists, shifting the geopolitical balance.
3. Economic and Geopolitical Implications
Context: The TACO tactic has had a significant impact on the global economy. The Wall Street Journal reports that Trump’s tariff threats have caused market volatility, with average declines of 0.5–1% after each announcement, followed by 1–2% rebounds when he retreats. Financial Times estimates that 2025 tariffs could reduce the world’s GDP by 0.6% if fully implemented.
El Confidencial and Negocios TV highlight the risk of inflation in the U.S., with projected increases of 2–3% in imported consumer goods.
Analysis:
- Economic: The New York Times and Bloomberg warn that the unpredictability of TACO discourages long-term investment, as companies fear abrupt policy shifts. Times of India says that emerging economies like India face inflationary pressure from disrupted supply chains.
The Guardian criticizes that although Trump secures temporary concessions (like opening European markets), the overall economic cost outweighs the benefits, especially for American consumers. Frankfurter Allgemeine Zeitung says the tactic has strengthened protectionism but at the expense of trust in multilateral trade.
- Geopolitical: The South China Morning Post and WION note that TACO has strained relations with allies like the EU and Canada, pushing them to explore agreements with China. The Telegraph and The Washington Post warn that the perception of weakness (Trump backing down after threats) benefits adversaries such as China and Russia, who project consistency. Hurriyet notes that Turkey, affected by 15% tariffs, is reconsidering its alignment with the U.S.
According to Corriere della Sera, the tactic reinforces an image of Trump as an erratic negotiator, potentially weakening U.S. influence in forums like the WTO.
4. Criticisms and Defense of the TACO Tactic
Context: Trump has vigorously defended the TACO tactic, calling it “negotiation” and rejecting the label of “cowardice.” In a press conference on May 28, according to CNBC and ABC News, Trump was outraged when CNBC journalist Megan Casella referred to the term TACO as “unpleasant,” insisting that his retractions are strategic to obtain concessions.
Defense by Trump Supporters:
According to Fox News and The Wall Street Journal, Trump insists that TACO is a deliberate tactic to “set a ridiculously high number” and then negotiate downward, as he did with the EU and China. El Debate and La Razón support this view, arguing that Trump has succeeded in getting trading partners to sit down at the table, something that hadn’t occurred under previous administrations. NBC News quotes Trump advisers who say the tactic has led to preliminary deals with the EU and Japan.
Criticisms:
The New York Times and Politico argue that TACO is more improvisation than strategy, citing a lack of clear objectives beyond media victories. The Guardian and Le Monde criticize that the tactic alienates allies and strengthens adversaries, while El País notes that being seen as “unreliable” reduces Trump’s future negotiating power. South China Morning Post highlights that China has used U.S. unpredictability to present itself as a more stable partner. The Objective warns that the tactic could have domestic consequences, with moderate Republicans questioning its effectiveness. (Gustavo de Aristegui)
5. Future Implications and Recommendations
Context: According to The Wall Street Journal and CPA Practice Advisor, the TACO tactic faces diminishing returns, as trading partners begin to “internalize” the pattern, with less pronounced market drops after each announcement (The Daily Beast). Reuters notes that the EU and China are developing strategies to counter this tactic, such as prolonged negotiation frameworks.
Analysis: While effective for forcing short-term talks, the TACO tactic is unsustainable in the long term. Financial Times and The Guardian warn that economic volatility could erode confidence in U.S. leadership, while The Washington Post suggests that allies like the EU might form alternative commercial blocs with China or India (Times of India).
Recommendations:
- Coordination with Allies: The U.S. should consult with the EU, Canada, and Japan before announcing tariffs to avoid fractures within NATO and other alliances (The Globe and Mail).
- Clear Objectives: The Wall Street Journal recommends that Trump define specific commercial goals (for example, reducing the trade deficit by 10%) rather than relying on showy threats.
- Focus on Anti-Terror Pressure: Fox News and The Telegraph say trade policy should not divert resources from sanctions against Iran and its proxy groups like Hamas and the Houthis.
- Market Regulation: Bloomberg suggests that the U.S. Securities and Exchange Commission (SEC) monitor volatility caused by TACO to protect investors.
Conclusion:
Trump’s TACO negotiation tactic, marked by extreme tariff threats followed by retractions, has shaped U.S. trade policy in 2025, producing both temporary concessions and global economic instability. Although it can force rapid negotiations, its unpredictability has weakened U.S. credibility, strengthened rivals like China, and strained alliances. Its economic effects include stock market volatility and inflation, while geopolitical effects point to possible realignments. To mitigate these risks, the U.S. should pursue a more consistent strategy, involving allies and clear goals, while ensuring trade policy does not distract from counterterrorism or global stability.