Trump Always Chickens Out (TACO) is a term that gained prominence in May 2025 after many threats and reversals during the trade war, U.S. president Donald Trump initiated with his administration's "Liberation Day" tariffs. The acronym is used to describe Trump's tendency to make tariff threats, only to later delay them as a way to increase time for negotiations and for markets to rebound. The term originated on Wall Street, where the TACO trade involves buying stocks cheaply after a tariff announcement pushes stocks lower, then selling them at a profit after the tariffs are delayed or reduced and the market rebounds.

Trump's tendency to change his mind on policy positions had been described since his first presidential campaign. Before the emergence of the TACO acronym, observers used terms such as backtrack and flip-flop. Wall Street traders called it the "Trump put" when, during his first term, he would change a policy if the markets reacted badly to it.

This tendency continues to be reported leading up to and during Trump's second presidency, with commentators noting specific issues including trade, immigration, and international relationships.

The term was first used by Financial Times journalist Robert Armstrong in a May 2, 2025 opinion piece that discussed tariffs and their effects on the US markets. In the piece, part of a series titled "Unhedged", Armstrong said that markets were realizing 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". Armstrong called this "the Taco theory: Trump Always Chickens Out".

Katie Martin of the Financial Times gave three examples of "the Taco factor" where Trump had reversed a decision in response to the market's reaction: Trump setting high "Liberation Day tariffs" and pausing them a week later, his calling for the termination of Federal Reserve chair Jerome Powell before distancing himself from the idea, and the US committing to roll back tariffs against China during trade talks in May. Another example is when Trump would delay his 50% tariff proposal affecting EU imports to July 9, this would later cause European markets to rally.

Shannon Pettypiece of NBC News gave ten examples of Trump having "threatened, then backtracked on, tariffs" since taking office, saying that in her view Trump had threatened "far more" tariffs than he had imposed.

On June 11, 2025, Trump posted on Truth Social that he had reached a deal in the US's trade war with China. ABC News noted that a Chinese spokesperson said it was a "framework" to consolidate the agreements reached in May, and that the talks represented the "first meeting". Secretary of Commerce Howard Lutnick referred to the agreement as a "handshake for a framework". The Wall Street Journal published an editorial criticizing the deal, calling it a "truce that tilts in China's direction" by appearing to be "resetting their trade relationship to where it was a few months ago before a tit-for-tat escalation". Fareed Zakaria of The Washington Post saw the vague trade deal as an example of "TACO", except for "one twist", that Americans "will still pay a tariff rate of 55 percent on goods from China (compared to China's 10 percent tariff on American goods)". On July 8, 2025, Trump again announced a delay in implementing tariffs against 14 countries, pushing back the deadline for negotiations from July 9 to August 1. Bloomberg reported that Trump has softened his hardline tone on China to ensure a summit with General Secretary of the Chinese Communist Party Xi Jinping, aiming to push for a trade agreement between America and China.

Gideon Rachman of the Financial Times wrote that "Trump always chickens out on foreign policy too," citing a paper by Jeremy Shapiro of the European Council on Foreign Relations that found that Trump had threatened the use of force against foreign adversaries on 22 occasions (as of early 2025), but actually did so on only two occasions. For example, during his first term, Trump threatened "fire and fury" against North Korea and threatened to wipe Afghanistan "off the face of the earth" within 10 days; Trump followed through in neither case, instead entering failed negotiations with North Korea over its nuclear program and entering into an agreement for a U.S. withdrawal from Afghanistan without any meaningful concessions from the Taliban in return.