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Wall Street's so-called "TACO trade" - buying dips when trade tensions flare - played out again this week in the U.S. stock market as investors bet that the Trump administration's latest round of tariff threats would eventually fizzle.
A relatively flat stock market on Tuesday came just a day after President Trump threatened Japan, South Korea and others with steep tariffs starting August 1, unless they reach a trade deal. Seasoned stock market investors, who've weathered a series of tariff threats from Trump in recent months, seemed to take this one in stride.
Keeping investors guessing, Trump also announced plans for a 50% tariff on copper imports, sending prices of that metal soaring to a record.
Trump's new August 1 deadline replaces a cutoff that was supposed to hit on Wednesday, July 9. Despite ambitious promises of 90 deals in 90 days following April's tariff delay, Trump's team has only locked down a limited deal with Britain and a vague agreement with Vietnam.
"TACO" stands for "Trump Always Chickens Out" - a term that caught on with traders after numerous tariff threats from Trump were later walked back. It's the latest addition to Wall Street's collection of acronyms, joining the likes of FOMO, FANG, and FUD.
Japanese trade negotiator Ryosei Akazawa reported a lengthy discussion with U.S. Commerce Secretary Howard Lutnick, saying they'd "actively" continue talks. Japan, facing potential 25% tariffs, is pushing hard for auto industry protections - even as Trump on Tuesday wrote on his social media website that "no extensions will be granted."
There is still plenty of worry to go around on Wall Street. Investors are fretting about how higher tariffs could fuel inflation and tap the brakes on economic growth - concerns you can see in the 10-year Treasury yield, which has climbed to its highest level in over two weeks. Adding to anxiety: Congress last week passed the Trump-backed "Big Beautiful Bill," a massive spending package that's set to pile on trillions in debt and bump the debt ceiling by $5 trillion.
Meanwhile, companies are struggling to manufacture "Made in the USA" products for prices customers are willing to pay.
The stakes for everyday Americans? Yale Budget Lab's analysis shows Trump's tariffs could send shoe prices soaring 37% and clothing costs up 35%.
Read the latest tariff headlines below. If you like this newsletter or have suggestions on how we can make it better, send me an email to noel.randewich@thomsonreuters.com.
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