MARY LOUISE KELLY, HOST:
Tacos have been on President Trump's mind recently. That is because TACO is now not only a spicy tortilla treat, but also an acronym for - T-A-C-O - Trump Always Chickens Out. Well, President Trump was not happy when asked about TACO earlier this week.
(SOUNDBITE OF ARCHIVED RECORDING)
PRESIDENT DONALD TRUMP: But don't ever say what you said. That's a nasty question. Go ahead.
UNIDENTIFIED JOURNALIST: Mr. President....
TRUMP: To me, that's the nastiest question.
KELLY: OK, the term TACO is meant to capture a trade theory that goes like this. President Trump announces sweeping tariffs, the stock and bond markets plummet and then, a week or so later, President Trump walks it all back. Well, Financial Times columnist Robert Armstrong came up with TACO. He joins us now from New York. Hi there.
ROBERT ARMSTRONG: Hi, Mary Louise. It's great to be here.
KELLY: Great to have you with us. Am I right in thinking this all began with a column that you came out with on May 2, and it was headlined, the U.S. market's surprise comeback and the rise of the TACO trade theory?
ARMSTRONG: Yes, I think that's the first time that I used it. This pattern that you just described so well was happening so often, and I had to talk about it so often in my newsletter, that I needed a kind of tag or shorthand for it so I didn't have to reexplain it every time that it came up. So I just tried to think of a catchy acronym, and TACO happened to be the most kind of amusing one that I could think of.
KELLY: OK.
(LAUGHTER)
KELLY: You weren't, like, eating a taco while trying to...
ARMSTRONG: No. I may have been hungry...
KELLY: ...Finish your column by deadline or - OK, yeah.
ARMSTRONG: ...But that's about as much as it was.
KELLY: So, I mean, just to be clear, this was meant as tongue-in-cheek. I mean, the Financial Times, for those who are not regular readers, it's - it is not known as a bastion of woke, progressive, lefty journalism attacking Republicans.
ARMSTRONG: (Laughter) I like to think of us as the hometown newspaper of the rootless global elite. We're not lefties, but we're also not Trump-style Republicans.
KELLY: So let's get specific. Give me an example in which you detect TACO.
ARMSTRONG: Well, the most prominent example was the famous Rose Garden performance with the weird cardboard sign that put swingeing tariffs on penguins on otherwise uninhabited islands, to say nothing of the rest of the world. Most recently, with the president's announcement of 50% tariffs on Europe - a pronouncement that had a shelf Iife of...
KELLY: That was a week ago.
ARMSTRONG: Yeah, and this was a pronouncement with a shelf life of three days, as I remember it. And that was...
KELLY: Like, if you took the long weekend off, you would have blinked and missed the whole...
ARMSTRONG: (Laughter) You would have blinked it.
KELLY: ...The whole saga. Yeah.
ARMSTRONG: Yes. And the New York Times, I think, after the long weekend, had a headline that said something like, you know, stocks rally on TACO trade. And that's when I knew that my child, TACO, had really grown up and left home, and I was no longer in charge.
KELLY: Now, President Trump, he says this is his negotiating tactics, it's deliberate and it works - that he's trying to get a better deal for the U.S. And yes, maybe markets tumble when he threatens tariff, but then they rebound and they're bigger and better when he backpedals.
ARMSTRONG: There is an important element of truth to that. It is a totally classic principle of negotiation that if you are the first one to talk, you make an offer that is just outrageous, and you know you won't realize that offer, but you have anchored the minds of the negotiators at a high plateau. What is weird about it in Trump's case is that he doesn't come down from the original high number because the other side of the negotiation has said anything at all. Often, he backs off before they've even had a chance to talk. What he responds to instead is the market's displeasure. So he's not negotiating with the Europeans or the Japanese or the Chinese. He's negotiating with the stock and bond market, and he is losing.
KELLY: So do you see an overall strategy here in the president's maneuvers on tariffs?
ARMSTRONG: I think that the president believes that other countries around the world were doing wicked things to the United States, and when they stop, it will only be good. But the sad fact about economic policy is that it always involves trade-offs. If you want to get one thing, you're going to pay for it somewhere else. And every time the president discovers that he's going to pay, he just seems to back off. And what that says to me is the president likes tariffs on TV, but when the rubber hits the road and the costs become apparent, he just doesn't care that much.
KELLY: Any other acronyms you're working on?
ARMSTRONG: (Laughter).
KELLY: I'm sitting here trying to think if NACHO could be - has potential, or - I don't know - SALSA.
ARMSTRONG: After the extremely strange last 24 hours have, I think I am retiring from the acronym game.
KELLY: (Laughter) Financial Times columnist Robert Armstrong. He also writes the "Unhedged" newsletter, and this month, he coined TACO. Thank you.
ARMSTRONG: Cheers. Transcript provided by NPR, Copyright NPR.
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