One has to feel some sympathy for the people at the US borders who are tasked with storing all the goods that arrive and not releasing them until the required duties are paid. With Trump careening from one tariffs policy to another on pretty much an ad hoc and day-to-day basis, they must be feeling as if they are in a whirlwind.

The latest reversal came last evening when the New York-based court of international trade (who knew that there was even such a court?) upheld a legal challenge that argued Trump had exceeded his legal authority when he bypassed Congress in announcing his tariffs.

The ruling by a three-judge panel at the New York-based court of international trade came after several lawsuits argued Trump had exceeded his authority, leaving US trade policy dependent on the president’s whims and unleashing economic chaos around the world.

Tariffs typically need to be approved by Congress but Trump has so far bypassed that requirement by claiming that the country’s trade deficits amount to a national emergency. This had left the US president able to apply sweeping tariffs to most countries last month, in a shock move that sent markets reeling.

The court’s ruling stated that Trump’s tariff orders “exceed any authority granted to the president … to regulate importation by means of tariffs”.
…

The court ruling immediately invalidates all of the tariff orders that were issued through the International Emergency Economic Powers Act (IEEPA), a law meant to address “unusual and extraordinary” threats during a national emergency.

The judges said Trump must issue new orders reflecting the permanent injunction within 10 days.

Of course, Trump is appealing the ruling. Given that the courts have overturned so many of his executive orders, not just on tariffs, the appeals courts and the Supreme Court are faced with a huge number of cases that will have to be decided expeditiously, far more than the norm. How they will find time to hear oral arguments and rule is going to be a challenge for them. As for the Supreme Court, they may be forced to issue summary judgments without oral arguments.

Even before the ruling, there was great confusion about what the tariffs were. Recall the dramatic announcement by Trump, with graphic displays and all, of the massive tariffs on pretty much the entire world, including uninhabited islands? Those were mostly suspended for a period of 90 days, with the main exception being China which still had large tariffs. Then Trump announced that after talks with China there would be a partial reduction in those tariffs. Then Trump announced 50% tariffs on the European Union and then after a call with the head of the EU announced a 30-day suspension of those tariffs. (I am recalling these details from memory because these tariffs are so ephemeral that it did not seem worthwhile to go back and exhaustively check for accuracy. So I apologize in advance for any errors.)

Given Trump’s practice of announcing huge tariffs and then backing down when the markets and other countries react adversely, is it any wonder that some Wall Street traders now have a derogatory nickname for him of TACO, which stands for Trump Always Chickens Out?

Wall Street has been riding a historic roller coaster the past few months due to President Donald Trump’s on-again, off-again tariff threats. Now, investors are learning to take his words with a grain of salt — and a bit of salsa, too.

That’s because there’s a new type of trade taking hold: TACO, short for Trump Always Chickens Out. In other words, don’t fret too much about Trump’s latest tariff threat and go on a selling spree, because eventually he’ll back down and a relief rally will ensue.

Trump said he first learned of the term, coined by Financial Times commentator Robert Armstrong, on Wednesday when a reporter sought his reaction to it.

“I chicken out? Oh, I’ve never heard that. You mean because I reduced China from 145% that I set down to 100 and then to another number?” Trump said Wednesday, referring to tariff rates he imposed on imported Chinese goods. (The rate is now 30%, after Trump raised it as high as 145% last month, much to investors’ dismay, only to reduce it a few weeks later.)

Last week, Trump threatened to impose 50% tariffs on goods from the European Union come June 1. Stocks turned lower after his threat, which he doubled down on later in the day, claiming there was no room to negotiate. Two days later, he said he’d wait until July 9 to levy a 50% tariff on EU goods following promising talks. When US markets reopened after Memorial Day, stocks closed well in the green.

This vacillation has created a new category of investors called ‘TACO traders’.




Investors engage in “TACO trade” by buying stocks at lower costs after Trump announces new tariffs or increases them, then reap the benefits when the markets rebound as he delays or backs off of them.

Trump was clearly annoyed with the reporter who brought up the TACO jibe.

The president has spent years cultivating a reputation for political muscle. So when he was asked by a reporter in the Oval Office on Wednesday whether the term might be a valid description of his approach to tariffs, Mr. Trump reacted with ire.

“I chicken out? I’ve never heard that,” he said. “Don’t ever say what you said,” he told the reporter. “That’s a nasty question. To me, that’s the nastiest question.”

Trump is a bully who loves to ridicule others but, like most bullies, he can dish it out but cannot take it.

Trump seems to think that tariffs can be treated like his real estate deals where you throw out one figure one day and another the next, as bargaining ploys. While it is funny to call him a TACO, what is not funny is to make global trade policy on a whim. Apart from giving the tariff collectors nightmares, businesses will find it impossible to calculate the cost of goods and set prices and make long-range plans such as where to source raw materials and locate factories.