Many friends are worried about Trump's 155% tariffs on China, but in fact, from the perspective of the risk market, the Nasdaq and S&P have not fallen and remain quite stable. This is because the current market view is that Trump will definitely TACO, which stands for Trump Always Chickens Out. It means that Trump makes threats and creates panic on the surface, but ultimately backs down or resolves things through negotiation.

Why?

Because Trump is more concerned about the rise and fall of the U.S. stock market compared to other American presidents. He cares more about his achievements during his time in office and is more willing to portray himself as a savior, which is also the essence of MAGA, Make America Great Again.

It might be a bit convoluted, but to put it in a story we heard as kids, it's like the story of "The Boy Who Cried Wolf." When he first started taking a hard line on tariffs, everyone was worried that Trump would be very extreme. However, once the market began to decline in response to Trump's actions, he would find ways to recover, the most common being delays.

April 2025 is an example of this situation. When the tariff plan was announced in February, the market was shocked, but the actual implementation of the tariff strategy was not as aggressive. This could also be a good approach: first scare the market with exaggerated data to create panic, and then ease the market's anxiety with more moderate data.

After doing this repeatedly, people's attention wanes. The results of the trade war with China in April compared to last week seemed trivial, as last week was like child's play. At that time, the mainstream narrative was all about TACO. Although the results are still unknown, the next statement is "meeting with Xi Jinping in a few weeks," which increases the probability of TACO.

This article is sponsored by #Bitget ｜ @Bitget_zh

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