WASHINGTON: International markets and the world at large have grown accustomed to US President Donald Trump’s abrupt reversals, but Monday’s pivot on Iran was one of his most spectacular yet.
Since returning to power last year, Trump has openly embraced governing “by instinct.”
Regarding the conflict in the Middle East, he has made a flurry of conflicting statements about the goals and timeline, even declaring on March 13 that the war would end when he “felt it in his bones.”
“Trump has been a master of sudden twists and turns. So it’s sometimes hard to know if there’s a strategy or if it’s just always improvisation,” said Garret Martin, professor of international relations at American University in Washington.
These reversals typically follow a pattern. The Republican president issues commercial, diplomatic or military threats – often accompanied by ultimatums – that shock the international community.
Then he abruptly reverses course. He claims to have secured crucial concessions, which he rarely reveals, and promises a solution to the crisis, causing markets to swing dramatically.
On Monday, oil prices fell and stocks rose after Trump announced on his Truth Social platform that the United States had held talks with Iran to end the conflict. North Sea Brent crude fell more than 14 percent, while its U.S. counterpart, West Texas Intermediate, lost nearly 10 percent. Meanwhile, the Dow Jones Industrial Average rose 700 points.
Tacos
As recently as Saturday, Trump had given Iran 48 hours to reopen the Strait of Hormuz – a vital passage for oil shipments out of the Gulf – under threat of massive attacks on the country’s power plants. He didn’t mention dialogue.
But then on Monday he declared a new deadline – five days this time – to allow time for negotiations to continue.
He spoke of “very productive” discussions with “highly respected” and “very solid” Iranian officials, without identifying them.
But Iranian officials denied any talks were taking place, partly dampening the market’s enthusiasm.
Trump touted his negotiating skills in a speech Monday in Memphis, Tennessee, highlighting his business instincts over specific concessions from Tehran.
“My whole life has been a negotiation, but with Iran we have been negotiating for a long time,” he said. “And this time they mean business.”
The pattern is so well-known that it has its own acronym – “TACO” for “Trump Always Chickens Out” – coined by Financial Times journalist Robert Armstrong in May 2025 after Trump backed down on threats to impose global tariffs that caused market havoc.
Shakes up the markets
The TACO term originally referred to a stock market strategy that involved capitalizing on a decline in assets — triggered by a bombastic announcement by Trump — to buy low in the hope of selling on at a profit when he inevitably changes his mind.
Other examples include Trump backing away from threats of the US taking over Greenland, or those directed at Federal Reserve Chairman Jerome Powell over US interest rates.
Quite often, while these u-turns shake the markets, they remain nebulous in terms of actual trades.
American partners and adversaries alike now know that “there is always a transience to everything with this administration; deals and promises are only as good as the moment they are made,” Martin said.
In the case of Iran, Martin suggests Trump backed off because of three factors: market turmoil, potential pressure from the Gulf nations, and the rise of “tensions” within his own Make America Great Again, or MAGA, political movement over the conflict.
