‘Don’t ever say that’: Donald Trump erupts over claim that he ‘always chickens out’

Donald Trump has reacted furiously to a theory, currently gaining traction on Wall Street, that he “always chickens out”.

Donald Trump has reacted furiously to a theory, currently gaining traction on Wall Street, that he “always chickens out” instead of following through on his threats to impose tariffs.

Mr Trump took questions from reporters during an event at the White House today, where his selection to be the interim United States Attorney for the District of Columbia, Fox News host Jeanine Pirro, was sworn in.

One question in particular, from CNBC journalist Megan Casella, displeased him.

She brought up a term first coined by Financial Times columnist Robert Armstrong, which has reportedly taken hold among traders on Wall Street.

“The recent rally has a lot to do with markets realising that the US administration does not have a very high tolerance for market and economic pressure, and will be quick to back off when tariffs cause pain,” Mr Armstrong wrote on May 2.

“This is the TACO Theory: Trump Always Chickens Out.”

The idea here is that the markets have taken note of Mr Trump’s constant vacillation on his tariff policies. The President has repeatedly announced severe and sweeping tariffs, only to back away from them after the inevitable financial hyperventilation, usually by lowering the tariff rate or by agreeing to large carve-outs for affected industries.

Mr Trump argues that is a negotiating tactic. Wall Street, however, appears to be coming around to the view that it is weakness; that when confronted by a tanking stock market, Mr Trump tends to lose his nerve.

Mr Trump at the White House today. Picture: Evan Vucci/AP

That has implications for Mr Trump’s negotiating strategy going forward. Threats only work, of course, if their target believes they are credible. If other countries follow Wall Street’s lead, concluding Mr Trump is brittle and easy to scare into backing down, his threats inevitably become much less effective.

Mr Trump seemed to sense that when Ms Casella brought up the “TACO” theory today. He was quick to reject it.

“Mr President, Wall Street analysts have coined a new term called ‘TACO trade’. They are saying Trump always chickens out on your tariff threats. And that’s why markets are higher this week. What’s your response to that?” she asked.

“You mean because I reduced China from (a tariff rate of) 145 per cent, that I set down to 100 per cent, and then down to another number?” Mr Trump responded.

“And I said, ‘You have to open up your whole country.’ And because I gave the European Union a 50 per cent tax tariff? And they called up and they said, ‘Please, let’s meet right now please. Let’s meet right now.’ And I said, ‘OK, I’ll give you until June 9.’ I actually asked them, I said, ‘What’s the date?’ Because they weren’t willing to meet. And after I did what I did, they said, ‘We’ll meet any time you want. And we have an end date of July 9.’

“You call that chickening out? Because we have $14 trillion now invested, committed to investing when Biden didn’t have practically anything.”

US President Donald Trump. Picture: Jim Watson/AFP

Mr Trump gave two different dates for the European Union’s deadline to reach some sort of trade agreement. The actual date is July 9.

Last month, the US President announced a 20 per cent tariff on most goods from the EU, before lowering it to 10 per cent, pending a deadline for trade negotiations on July 8. Then, last week, he announced it would rise to 50 per cent, due to his frustration at the pace of those trade talks.

That 50 per cent rate was set to take effect on June 1, before Mr Trump had a phone call with European Commission President Ursula von der Leyen, which he described as “very nice”. So now we have the July 9 deadline.

That all sounds quite convoluted. We’re back where we started, essentially, with Mr Trump’s original deadline shifted back by one day.

For what it’s worth, the “$14 trillion now invested” figure Mr Trump cited appears to have been plucked out of thin air. Here’s a fact check from ten days ago, when his chosen number was fluctuating between $US6 and $US10 trillion.

Anyway Mr Trump ended his answer with a potshot at Ms Casella.

“Six months ago, this county was stone cold dead. We had a dead country. We had a country – people didn’t think it was going to survive,” he said.

“And you ask a nasty question like that. It’s called negotiation. Don’t ever say what you said. That’s a nasty question.

“To me, that’s the nastiest question.”

Ms Casella was asked about the exchange on air a short time later.

“You might have heard the term ‘TACO trade’, Trump Always Chickens Out. That is what some analysts, some commentators have been using to talk about this,” she said.

“So I asked the President directly, what’s his response to that, and he had a long answer.”

She noted, wryly, that Mr Trump “did not like this question”, but did nevertheless give an illuminating answer on “whether he’s bluffing too much and it’s hard to take seriously now on the global stage”.

Megan Casella, the reporter who asked the question, recounting the exchange on CNBC.

“Wall Street loves an acronym, and the idea here is just, yes, the markets will go down when he makes a threat only to rebound, often higher, once the threat is back off the table,” said Ms Casella.

“And so far, where we are in sort of this tariff limbo right now, many of, if not most of the tariff threats that have been levelled so far are not yet in effect.

“That could be a different story six months from now. But the question now being: will other countries still take him seriously and come to the negotiating table if this pattern continues?”

“I hear he called that a ‘nasty question’, Megan,” anchor Kelly Evans said.

“He sure did. A badge of honour, I guess,” Ms Casella quipped.

Originally published as ‘Don’t ever say that’: Donald Trump erupts over claim that he ‘always chickens out’