Investors are calling Trump a chicken - here's why that matters

Calling someone “chicken” might sound like a playground insult, but it’s exactly the label some financial investors have begun attaching to US president Donald Trump.

- BY ALEX DRYDEN

The “Taco” trade, short for “Trump Always Chickens Out”, has gained traction in financial circles in recent weeks, as investors come to believe that whenever markets begin to slide as a result of one of his policy decisions, Trump tends to retreat.

The jibe appears to have struck a nerve. When a reporter asked him about the “chicken” reputation this week, Trump bristled. “Oh, isn’t that nice — I chicken out. I’ve never heard that,” he snapped. The president returned to the topic later to criticise the “nasty” question and insisted that he was no such thing.

Policy reversals have been a hallmark of both Trump’s first and second terms. During the 2018-19 trade wars, he frequently threatened sweeping tariffs only to water them down in subsequent rounds of negotiation.

A similar pattern has emerged this year. In early April, Trump’s “liberation day” announcement triggered a sharp sell-off, with the S&P 500 falling more than 12% over the following week.

However, as market volatility surged, the administration softened its positioned and opted to delay the tariffs for 90 days. As the tariff plans were softened, markets rebounded. The index is now 4% higher than it was before the announcement and up 0.7% year-to-date.