Taco trade stikes Again

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Extension of the tariff truce
On August 11–12, 2025, U.S. President Donald Trump signed an executive order extending a tariff truce with China for another 90 days, delaying a planned surge in duties until early November specifically November 10. This move keeps U.S. tariffs on Chinese goods at 30%, and Chinese tariffs on U.S. goods at 10%, instead of escalating to 145% and 125%, respectively.
Both the U.S. and China reaffirmed their commitment to broader trade negotiations.

Market and seasonal impact
The delay arrived just before the U.S. holiday shopping season the critical period for importers to stock up at lower tariff rates. The truce provided a sense of stability for markets and signals a window for advancing talks.

Political and rhetorical context
Critics characterized the extension as yet another instance of Trump averting tariff escalations at the last moment coined the “TACO trade,” or Trump Always Chickens Out.

Trade strategy and next steps
Observers noted that both sides used the extension to buy time while preserving strategic flexibility. U.S. Treasury Secretary Scott Bessent and others deemed the originally planned triple‑digit tariffs “unsustainable,” and the extension was seen as a pathway toward a possible Trump Xi summit later this year.

Implications for Europe
The news of the truce—and broader easing in trade tensions helped improve the outlook for European corporate earnings. Europe’s STOXX 600 companies are now expected to see 4.8% earnings growth for Q2 2025, with technology leading at 26%, followed by healthcare, financials, and industrials.

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