Introduction
The United States government continues to stir controversial topics that generate unease among investors. This is not a new pattern, as Donald Trump’s second administration term began with the disruption of the global trade order. His initial stance in April 2025 triggered strong uncertainty, causing markets to adjust.
Trump’s Geopolitical Strategy and Market Reactions
Currently, the focus is on geopolitical order, and Trump’s strategy seems to be generating nervousness once again. In April, markets experienced a shake-up, but within weeks, investors realized that Trump’s threats would not materialize in reality, at least not to the extent suggested.
The acronym TACO (Trump Always Chickens Out) was cleverly coined to imply that open threats in the press result in minimal action, potentially generating profitable trades. Investors understood this well. The economy grew more than expected, corporate profits advanced significantly, particularly in technology and artificial intelligence sectors. Meanwhile, inflation only saw a marginal increase due to moderate tariff application; market volatility was minimal during the second half of the year, and interest rates dropped.
This might be a second iteration of the TACO trade. With November elections approaching in the U.S., Trump’s administration position is not as strong as it once was. Disappointing local election results for Republicans, the Epstein scandal, persistent inflation in essential goods, and job market signals suggest government pressure to modify the Fed’s criteria to lower interest rates.
Trump’s Economic Policies and Potential Impact
Trump aims to annex more territories to the U.S., wants to project an image of a peacemaker in Ukraine and Iran, seeks increased spending and tax cuts, desires low interest rates (especially mortgage rates), and aims to control the Federal Reserve. These ambitions suggest a year of multiplied events similar to what we’ve witnessed in just two weeks.
However, it’s crucial not to underestimate Trump and his administration’s ability to instigate conflicts on multiple fronts—with Europe over Greenland, China regarding tariffs, and now their trade deal with Canada. Even domestically, they face opposition from Congress and the Supreme Court’s pending decision on tariff legality.
Key Questions and Answers
- Q: What is the TACO trade? A: The TACO trade is an investor strategy based on the assumption that Trump’s open threats in the press result in minimal real-world action, potentially generating profitable trades.
- Q: How have markets reacted to Trump’s geopolitical strategy? A: Initially, markets experienced a shake-up in April, but within weeks, investors realized that Trump’s threats would not materialize in reality, at least not to the extent suggested.
- Q: What are Trump’s economic policy goals? A: Trump aims to annex more territories, project a peacemaker image in Ukraine and Iran, increase spending and cut taxes, lower interest rates, and control the Federal Reserve.
- Q: How might these policies impact the economy? A: These ambitions suggest a year of multiplied events, similar to what we’ve witnessed in just two weeks. However, it’s crucial not to underestimate Trump and his administration’s ability to instigate conflicts on multiple fronts.
Author Information
*Rodolfo Campuzano Meza is the General Director of INVEX Operadora de Fondos de Inversión.
