Despite promised blowback from Europe, Donald Trump formally raised steel and aluminum tariffs to 50% from 25% on Tuesday. The move by the president raises trade tensions at a time when the US is locked in negotiations with numerous trading partners over his so-called “reciprocal” duties before a July 9 deadline. While those tariffs have been deemed by US courts to likely be illegal, they remain in place as litigation over them proceeds. The steel levies aren’t implicated by the rulings.
Still, the latest trade volley from the White House may eventually follow a pattern leaders the world over have come to understand: one in which Trump, 78, makes outsized threats and even follows through for a time, only to back off. Wall Street calls this “Trump Always Chickens Out,” or TACO, and some traders have made good money betting on his eventual retreats. The problem though is that Trump’s strategy is causing global indigestion: data increasingly show his game of chicken has tipped the world economy into a downturn—with the US among the hardest hit.