There’s a new joke making the rounds among investors on Wall Street. It’s called the “Taco trade,” short for “Trump Always Chickens Out.” This nickname suggests that whenever Donald Trump makes moves that scare the markets, he usually steps back or changes his approach later. Investors are using this idea to make sense of how markets react.

President Trump wasn’t happy when asked about this nickname during a press event at the White House. A reporter mentioned the “Taco” term, and Trump responded with sarcasm, saying he had never heard of it before.

Trump then talked about the tariffs he placed on China, saying they were very high. He also claimed he helped China by later reducing those same tariffs. However, he told the reporter not to repeat that kind of question and called it a “nasty” one.

He didn’t let the issue go. Later on, Trump brought it up again, making it clear that he was not someone who backs down. He said people often accuse him of being too tough, not weak.

Even so, many investors believe Trump has a pattern of taking bold actions and then stepping back. This belief has led to stock prices bouncing back after big drops, even though Trump has set the highest tariffs in over a hundred years.

Back in April, Trump introduced what he called “liberation day” tariffs on trade with most countries. This caused a steep fall in the markets. But surprisingly, the S&P 500—a major U.S. stock index—has still gone up about 1% so far in 2025.

The idea behind the Taco trade is simple: if Trump’s decisions shake the market, he’ll likely soften his position, allowing businesses to keep doing well. This belief could get stronger, especially now that a New York court has said Trump’s tariffs might not be legal.