Meaning of 'TACO trade' as Wall Street nicknames Trump sending him into rage

The term 'TACO trade' has been trending after a reporter asked Donald Trump about his thoughts on the newly coined phrase.

Trump chatted to journalists at the White House yesterday (May 28), when someone asked him about the so-called TACO trade - and it's safe to say the POTUS didn't take kindly to the line of questioning.

He replied: "Six months ago, this country was stone-cold dead. We had a country, people didn't think it was gonna survive. And you ask a nasty question like that?"

"Don't ever say what you said. That's a nasty question," the president further warned.

Donald Trump has responded to the new term 'TACO trade' (Kayla Bartkowski/Getty Images)

What is 'TACO trade' and where has the phrase come from?

Well, Financial Times columnist Robert Armstrong is responsible for coining the phrase to poke fun at the president and his increased tariff threats.

As to what the 'TACO' part stands for, it means 'Trump Always Chickens Out' in reference to him often changing his mind about the dramatically high tariffs he has been warning other countries about.

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For example, Trump threatened the European Union (EU) with 50 percent tariffs which were supposed to come into force on June 1, but he has since pushed this back to July 9, per The Times of India. In the meantime, the EU will face the standard 10 percent tariff while negotiations with the US continue.

The POTUS' trade war has wreaked havoc on the global stock market (Chris Kleponis/CNP/Bloomberg via Getty Images)

What is the TACO trade process?

The first step is for Trump to threaten drastically hiked tariffs and creating a trade war. This is then followed by stocks dropping as investors become nervous about the ongoing back-and-forth between the US and the countries it is imposing tariffs on.

After this Trump then 'chickens out' as such and backtracks on the threats by extending the deadline and as negotiations continue. Finally, the stock market rebounds as investors anticipate this pattern with Trump and buy stocks for cheap during the uncertainty.

Speaking on this, Tom Essaye of the Sevens Report said, as per Bloomberg: "The thesis behind the TACO trade is: Buy the Trump tariff dip.

"Essentially, Trump has proven to investors that he won’t actually follow through with draconian tariffs. As such, any sell-off following a dramatic tariff threat should be bought."

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