Reading the “TACO” Index: Signs of President Trump’s “TACO” Behavior

◆Since taking office in 2025, President Trump has pursued policies—such as raising tariffs and taking a hard line against Iran—that seem to disregard their impact on the markets and the economy. At the same time, he has repeatedly exhibited a pattern of behavior known as “TACO” (“Trump Always Chickens Out”), in which he softens his stance when concerns grow over market turmoil or a decline in his approval ratings.

◆In this report, we have developed the “TACO” index to identify signs of such policy shifts. The “TACO” index is calculated based on the S&P 500, the US 10-year Treasury yield, the US Dollar Index, and his approval ratings; it rises as falling stock prices, rising interest rates, a weaker dollar, and declining approval ratings occur simultaneously. A rise in the “TACO” index can be interpreted as a period in which the administration is facing increasing pressure to revise or withdraw its policies.

◆Looking back at the historical trends of the “TACO” index, a common pattern has been observed across different policy areas—including tariffs, issues surrounding the Federal Reserve’s independence, and the situation in the Middle East—where policy responses have softened following an increase in the “TACO” index. In particular, the greater the impact of a policy on markets and households, the more likely it is that a rise in the index signals an impending policy adjustment.

◆The “TACO” Index is, after all, merely a mirror reflecting “external” pressures—namely, the market and voters—and has its limitations in that it is difficult to capture the political dynamics “inside” the administration. However, it can be considered a useful indicator for visualizing the “cycle of hardline stances and softening” inherent in the Trump administration’s policy management. Continuously monitoring the level of accumulated pressure indicated by the “TACO” Index could serve as a compass for identifying turning points in the Trump administration’s policy management.