Will Trump TACO This Time?
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Trump tantrums are real — and it’s clear his team still can’t rein him in.
Whenever he flies into a rage, he vents straight onto social media. That’s a no-go for most politicians, who usually show more finesse in managing their messaging. But Trump? He’s built different. And once again, he erupted — this time over China’s rare earth curbs.
In a fiery Truth Social post, Trump threatened to cancel his meeting with Xi, hinted at even harsher measures, and separately warned of an additional 100% tariff on China.
That was enough to send the US indices down with marked volatility. Nasdaq Composite was down the most at 3.56% while the S&P 500 was down 2.71% last Friday.
The market response was swift and brutal.
On Friday, the Nasdaq Composite fell 3.56%, while the S&P 500 dropped 2.71%, as investors priced in the possibility of a renewed trade war.
China-related stocks were among the hardest hit. The iShares MSCI China ETF sank 5.77%, reflecting growing concerns about escalating U.S.-China tensions.
Semiconductors also sold off heavily — the VanEck Semiconductor ETF dropped 5.76%, amid fears of further restrictions on chip exports to China.
China’s tightening of rare earth exports added fuel to the fire. The VanEck Rare Earth ETF declined 7.1%, while the Global X Lithium & Battery Tech ETF plunged 8.8%.
These sectors sit right in the middle of the geopolitical crosshairs, and the market made it clear: anything tied to semiconductors, clean tech, or China exposure was fair game for a sell-off.
But nowhere saw more destruction than crypto.
The broad-based panic triggered a staggering $19 billion in crypto liquidations — the largest single-day wipeout in the asset class’s history. Leverage traders were decimated. One casualty was Jeffrey Huang, known online as Machi Big Brother, who reportedly lost nearly $14 million. In an even darker turn, Konstantin Gallish, a 32-year-old Ukrainian crypto trader managing $65 million, took his own life amidst the crash.
Yet, as always in markets, someone profited.
On Hyperliquid, a whale was reported to have made around $200 million by shorting Bitcoin just before Trump’s post — as though they had advance knowledge. This has revived speculation that Trump’s inner circle may be leaking information to profit from market volatility. But in crypto, where anonymity is the norm and regulations are weak, proving such allegations is almost impossible.
Despite the chaos, many investors are holding on to one familiar belief: Trump Always Chickens Out — or TACO.
I did a quick poll, and most respondents saw this as yet another TACO moment.
The logic is simple — Trump often lashes out, only to walk things back shortly after. And with money market funds now sitting at a record $7.7 trillion as of August 2025, there’s plenty of dry powder waiting to buy the dip if signs of de-escalation emerge.
True enough, over the weekend, Trump appeared to soften his stance. His tone shifted from threats to cooperation, hinting that he may still be open to a deal with China.
This is classic Trump playbook: throw a grenade, then send in the cleanup crew. Two of his key aides, Vance and Bessent, were likely working behind the scenes to calm him down and contain the fallout.
As of this morning, Asian markets have reacted to last Friday’s U.S. selloff. The Hang Seng Index opened down 2%, likely reflecting a delayed reaction to Trump’s post, since Asian markets were closed when it went live. Meanwhile, U.S. futures are showing signs of recovery — the S&P 500 and Nasdaq are both up over 1% in pre-market trading. Crude oil is also up 1.6%, and Bitcoin has rebounded more than 3%.
My own view? This is indeed a TACO trade. I’m not making any knee-jerk moves with my long-term positions. We’ve seen this pattern before — threats of 100% tariffs aren’t new, and after the first shock back in March-April this year, the market has become somewhat desensitized. The initial surprise had bite. Now, it’s more bark than anything else.
What we’re seeing now looks more like pre-negotiation posturing than genuine escalation. China’s moves have been measured and reciprocal — not aggressively provocative. Both sides want a deal. Neither wants to escalate further. This feels like a political theater piece rather than the opening of a new trade war.
That said, volatility will persist. Until there’s actual progress or a formal announcement, we should expect more wild swings. But if Trump follows his usual pattern, a deal — or at least a handshake — is likely coming soon.