Markets are so used to the TACO trade they didn’t even blink when Trump extended a tariff delay with China
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Once upon a time, a decision to delay sky-high tariffs on China would have been an eleventh hour save—but in 2025 markets barely noticed.
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August 12, 2025
10:59 AM
Fortune
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Economy·Tariffs are so used to the TACO trade they didn’t even blink when Trump ext a tariff delay with ChinaBy Eleanor PringleBy Eleanor PringleReporterEleanor PringleReporterEleanor Pringle is an award-winning reporter at Fortune covering news, the economy, and personal finance
Eleanor previously worked as a correspondent and news editor in regional news in the U.K
She her journalism training with the Press Association after earning a degree from the University of East Anglia.SEE FULL BIO This combination of pictures created on May 14, 2020 shows recent portraits of China's President Xi Jinping (L) and U.S
President Donald Trump.DAN KITWOODNICHOLAS KAMM/POOL/AFP/AFP - Getty Images barely reacted as President Trump ext the U.S.-China trade truce for another 90 days, keeping tariffs at 30% for the U.S. and 10% for China
Despite hints that Beijing and Washington are closing in on a deal, trading patterns for early 2025 show that U.S. importers are steering er of working directly with China
This time last year if the U.S. had been on the brink of an 145% tariff increase on exports from China, would have been in meltdown
They would have spiralled even further if they believed a recical 125% hike would be put in place by Beijing
Fast forward to 2025, and the end of President Trump’s 90-day pause in a tit-for-tat trade war with China apaches with little drama. have become accustomed to the White House’s malleable deadlines, to say the least
In fact, investors got so comfortable with the U-turns that the phrase “TACO” (Trump Always Chickens Out) was coined to describe how they bet on the
And the Oval Office didn’t disappoint
The White House announced yesterday that a further three-month delay had been agreed with China
As such, recical tariffs rates will remain at the rolled-back position of 30% for the U.S. and 10% for China
Once upon a time, this decision would have been an eleventh hour —but in 2025 barely blipped
Before the opening bell in New York, S&P 500 futures are flat, after the index closed down 0.25% yesterday
The Dow Jones closed down 0.45% and the Nasdaq was down 0.3%
Over in Asia, instead of being rocked by tension with their Western neighbors were positively upbeat
Tokyo’s Nikkei 225 bounced up 2.15% on opening, Shanghai’s Composite Index was up 0.5% and Hong Kong’s Hang Seng Index was up 0.25
Europe was relatively flat on opening: London’s FTSE 100 was up a modest 0.27% while Germany’s DAX was down a minor 0.1%. “Trump retreated from today’s deadline for higher trade taxes in imports from China. expected this,” noted UBS’s Paul Donovan to clients this morning. wise Deutsche Bank’s Jim Reid wrote to clients Tuesday morning that investors are eyeing the end of the week as the market-mover, casting the near-miss on China into the background. “ have been relatively subdued over the last 24 hours, as investors await today’s U.S
CPI and the much anticipated Trump-Putin summit on Friday,” Reid said. “One obstacle for the week has passed as Trump last night ext the U.S.-China trade truce for another 90 days
The previous deadline was due to expire today
So with investors very much in wait-and-see mode, major asset classes only saw modest moves yesterday, with the S&P 500 (-0.25%) closing slightly lower, whilst 10yr Treasury yields (+0.3bps) moved very little all day.” Some have def Trump’s see-sawing positions, saying the Oval Office has been right to give its negotiators more room to breathe
Last month, JPMorgan’s CEO, Jamie Dimon, told an event in Ireland that Trump had been right to extend certain deadlines, saying: “I hate to use the word ‘TACO trade’ because I think he did the right thing to chicken out.” He added, per the Financial Times: “Unfortunately, I think there is complacency in the market” which is now depending on such swings and delays in policy
Shifting patterns The crux of the negotiations during the first delay between Washington and China was coming to an agreement on rare earth minerals
Trade Representative Jamieson Greer said talks are “ halfway there.” But despite signs that the nations are closing in on a deal, trade patterns have already shifted toward a new reality where the countries work less closely together
Whether this will result in President Trump’s much-preferred domestic growth, or merely exporting from cheaper nations, remains to be seen
Oxford Economics’s lead economist Adam Slater noted to clients yesterday that the two biggest slumps in imports to the U.S. came from Canada (where imports are down 25% from January) and China, where imports are down 50% from January
Slater added: “China’s in U.S. imports has halved since the start of the year to just 7%
Given the large size of the tariff hikes imposed on China, this is not too surprising
But we would note that there is some uncertainty the real scale of the impact of tariffs on China—Chinese data on exports to the U.S. shows a much less dramatic decline of around 25% since January
This may partly reflect re-routing of Chinese goods through other countries.” The economist noted that tariffs are “highly uneven” between headline rates and applied rates on certain nations, due to various sectoral tariffs and exemptions
This week alone, for example, Trump allowed chipmakers Nvidia and AMD to sell in China as long as they d 15% of the revenues with the U.S. government
How this fits in with tariff negotiations remains to be seen, but Slater adds: “What is is that the wide variety of tariff rates across U.S. trading partners implies a lot of scope for trade patterns to shift, with U.S. importers shifting away from highly tariffed countries China
Some of this may already be visible in the data.” Here’s a snapshot of the action prior to the opening bell in New York: S&P 500 closed down 0.25% yesterday
S&P futures were flat this morning, premarket
STOXX Europe 600 was flat in early trading
The U.K.’s FTSE 100 was up 0.15% in early trading
Japan’s Nikkei 225 was up 2.15%
China’s CSI 300 was up 0.5%
India’s Nifty 50 was down 0.4%
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