Trump Always Chickens Out on Foreign Policy Too

Despite his rhetoric about fire and fury, the US President is nervous about the use of force.

- Gideon Rachman

Thanks to US President Donald Trump and my Financial Times colleague Robert Armstrong, many of the world's investors are now talking about the "Taco trade".

It was Robert who coined the phrase "Trump always chickens out" (Taco). The pattern is that the US President will promise to impose massive tariffs on a chosen target. But he will then later cut or delay the tariffs, often in response to an adverse reaction from the markets.

So far this has happened with Canada and Mexico, then with the "reciprocal tariffs" imposed on most of humanity (and some penguins), then with the 145 per cent rate on China. A threat to raise tariffs on the European Union to 50 per cent lasted all of a weekend. Hence - Taco.

The Taco phrase was drawn to Mr Trump's attention in a press conference last week. He was not amused and called it a "nasty question".

All the nastier, perhaps, for being accurate. In fact, "Taco" is not just a useful heuristic for investors. It also turns out to be a key to analysing Mr Trump's foreign policy.

As European Council on Foreign Relations research director Jeremy Shapiro points out in a recent paper, Mr Trump enjoys issuing blood-curdling threats of the use of force. But he very rarely follows through.

In his first term in office, Mr Trump famously threatened North Korea with "fire and fury" and also mused about the possibility of wiping Afghanistan "off the face of the earth" within 10 days.