President Trump has become so dependably unpredictable that markets have allegedly devised a phrase for navigating his foreign policy: the TACO Trade, an acronym for “Trump Always Chickens Out.”
Jamie Dimon, the CEO of JPMorgan Chase[/hotlink], isn’t a fan of the disparaging phrase, as he says that Trump has been right to change course on tariffs in some instances.
Looking at the market today, the billionaire banker is finding it lacking in this attention to detail.
Taking this week alone as an example, on Monday Trump kicked off his letter-sending spree to foreign governments outlining the hikes to exports they would soon be facing.
More than 20 countries have now received such letters, with Brazil, for example, facing a 50% hike and Japan looking at a 25% bump.
Despite the threats and fears over the tariffs’ impact on inflation, the market took little notice.
Yet this dependence on the fact that Trump will U-turn is the very reason he is increasingly unlikely to, noted UBS’s chief economist Paul Donovan.
In a note sent to Fortune this week, Donovan explained: “Investors are inclined to assume that Trump will retreat as Trump has done so often. However, Trump yesterday suggested equity strength was a sign [that] financial markets like tariffs.
“Thus, the paradox—markets are strong on the assumption Trump will retreat; markets being strong reduces the incentive for Trump to retreat.”
“So the bark is probably stronger than the bite here, and this probably reflects why S&P futures are only down a couple of tenths so far this morning.”
While many questions remain unanswered about Trump 2.0, one that may rise up the agenda as the months tick by is whether there is any appetite for Trump 3.0.
That being said, Trump doesn’t seem to be entirely against the idea.
Dimon, who has led JPMorgan for nearly two decades, isn’t getting drawn into the speculation, saying such concerns were “premature.”
Vice President JD Vance, he added, would also likely serve as a solid obstacle in the path of Trump seeking another reelection, as he would want to run under his own steam. Dimon said: “[Vance will] say, ‘Hey buddy, get in the basement. You’ve had your day in the sun!’”
