From TACO to TART? US stock futures sink as Trump threatens blanket 15% to 20% tariffs

S&P 500 futures careened lower on Thursday evening after President Donald Trump suggested that he’s mulling blanket tariffs of 15% to 20% (versus the current 10%) in an NBC interview.

That was shortly followed by a Truth Social post from the president imposing tariffs of 35% on imports from Canada effective August 1, though this reportedly includes an exemption for USMCA-compliant goods, per Bloomberg. Trump also told NBC that EU members will be getting tariff letters today.

The SPDR S&P 500 ETF, which tracks the benchmark US equity index, is down about 0.6% in premarket trading on Friday.

The “Trump Always Chickens Out” or (TACO) thesis has largely carried the day in explaining the market’s continued resilience ever since the April 9 pause and watering down of reciprocal tariffs vindicated buy-the-dip strategies.

To be clear, that includes what’s happening now, so far: S&P 500 futures are down not even 1% from all-time highs. Without the April imposition of tariffs and swift postponement of the worst of those measures, an announcement like Thursday night’s would likely have evoked a much more negative market reaction.

TACO is a thesis that’s worked incredibly well, zooming in on our recent lived market experience.

Zooming out, TART — Trump Always Raises Tariffs — is another enduring reality that investors have to navigate when the real estate mogul and former reality star is in residence at 1600 Pennsylvania Avenue.

When Trump is in office, US tariff rates go up. And they’ve gone up much, much more during Trump 2.0 (through May!) than they did in the totality of Trump 1.0.

“While the TACO phenomenon is narrowly correct (i.e. the president does tend to postpone decisions), it may also be turning increasingly obsolete (for focusing too narrowly on short-term implementation deadlines rather than the long-term trajectory of US tariff rates),” Andrew Bishop, Signum Global Research’s global head of policy research, wrote in a prescient July 8 note.

Whether this reality is enough to leave a bigger dent in the outlook for S&P 500 profits (with 12-month forward earnings at all-time highs) or multiples (at the high end of their long-term range) is something that traders will continue to wrestle with over the coming days and weeks.