In financial circles, a new term has gained traction: “TACO”, short for Trump Always Chickens Out. The phrase reflects a pattern noted by Wall Street traders — former U.S. President Donald Trump often threatens aggressive tariffs, causing market volatility, only to backtrack under pressure, prompting a market rebound.

This idea was recently spotlighted by Financial Times columnist Robert Armstrong, who wrote in May:

“The administration does not have a very high tolerance for market and economic pressure, and will be quick to back off when tariffs cause pain.”

While this analysis has become widely accepted in recent weeks, it wasn’t always so obvious. During Trump’s first 100 days in office, financial markets were thrown into disarray. Stock prices plunged and currencies swung sharply as the White House floated sweeping tariff policies.

Even though some of those initial fears faded when Trump retreated, real economic damage has been done. Certain tariffs were enforced, and the threat of future trade disruptions still looms — casting a shadow over global economic stability.

Mexico’s Incoming Leader Isn’t Taking Chances

Mexico’s new president-elect, Claudia Sheinbaum, appears to be taking note. While some investors hope Trump’s trade threats are more bark than bite, Sheinbaum isn’t counting on that.

The volatility tied to U.S. tariff policies has already impacted Mexico’s economy in the past. With another Trump term potentially on the horizon, Sheinbaum and her advisers are preparing for a scenario where Trump follows through on threats rather than backing down — a clear departure from the “TACO” assumption.

As the global economy braces for more uncertainty, Sheinbaum’s stance signals a more cautious and pragmatic approach: hope for restraint, but prepare for confrontation.