So Trump wants Greenland now. And Wall Street? They’re basically shrugging and saying “here we go again” while dusting off their favorite acronym: TACO.
No, not the delicious Mexican food (though honestly, that would make more sense). TACO stands for “Trump Always Chickens Out” – Wall Street’s cheeky way of saying the former president’s threats are mostly theatrical bluster designed to get people to the negotiating table.
Here’s what’s happening: Trump just threatened eight European countries with tariffs starting at 10% in February, ramping up to 25% by June if Denmark doesn’t play ball on Greenland. Markets are having a bit of a meltdown, but seasoned traders are wondering if this is just another episode of “The Art of the Deal: Geopolitical Edition.”
JPMorgan’s analysts are basically saying “we’ve seen this movie before.” They think Trump creates maximum noise to trigger negotiations and build leverage. It’s like starting a negotiation by asking for a million dollars when you really want fifty grand – classic opening move.
So what could actually happen? Wall Street has three main scenarios:
Scenario 1: The Deal (55% chance)
Trump and Denmark work out some arrangement where the US gets more access to Greenland’s resources without actually buying the place. Think of it like getting VIP access instead of buying the whole club. JPMorgan thinks this is most likely because, let’s be real, Denmark isn’t exactly eager to sell, and using military force would be… problematic (understatement of the year).
Scenario 2: The Walkback (40% chance)
Trump quietly drops the tariff threats, possibly after some face-saving “negotiations.” Remember when he did this with Mexico and Canada? Same playbook. BCA Research thinks there’s a decent chance Trump retreats on his own, especially with midterm elections coming up. Nobody likes expensive groceries, and tariffs make everything pricier.
Scenario 3: The Supreme Court Buzzkill (50% chance)
The Supreme Court might just say “nope” to Trump’s tariff authority altogether. They’re already reviewing his tariff powers, and threatening NATO allies might be the line even conservative justices won’t cross. It’s like your mom finally taking away your credit card after you’ve gone too far.
The thing is, investors have gotten pretty good at reading Trump’s playbook. David Rosenberg from Rosenberg Research notes that the “TACO trade” has been remarkably resilient – basically, betting that Trump’s bark is worse than his bite has paid off repeatedly.
Of course, there’s always the chance this time is different. But Wall Street seems to be betting on another round of dramatic headlines followed by a negotiated settlement that lets everyone save face.
The real question isn’t whether Trump will get Greenland (spoiler: probably not), but whether investors can stomach the uncertainty while this plays out. So far, the TACO believers are holding strong, even as markets wobble.
Pass the salsa – it looks like TACO Tuesday might be back on the menu.