Trump initially set April 9 as the start date for his tariff policy. Following a market decline, he moved the deadline to July 9, earning the nickname ‘TACO’ (Trump Always Chickens Out).
The deadline has now been further delayed to August 1, as officially announced. Some describe his shifting approach as a negotiating tactic, drawing on historical experiences like Smoot-Hawley, which suggests tariffs may not benefit trade.
The Pattern Of Deferrals
What this means, in short, is that we keep seeing the same movie play out—an announcement, a deadline, a reactive market, and then a deferment. Trump set a clear date: 9 April. But markets didn’t respond well—the pressure was too visible. So, on cue, the date quietly shifted to early July. Now, once again, we’re looking at 1 August.
To deliver this sort of move repeatedly and expect a different outcome is to test traders’ patience. Some began to shorthand this behaviour with the acronym ‘TACO’, which – while informal – reflects the trading world’s increasing scepticism. His track record on tariffs offers limited clarity, which complicates forward pricing. The uncertainty injects a sense of artificial volatility into derivative instruments that are otherwise well-modelled under stable policy regimes.
Commentators have pointed out that this tactic of threatening tariffs only to delay them draws on patterns from past economic events, particularly the Smoot-Hawley Tariff Act, which is still regarded by many economists as an example of how protectionism can worsen global trade conditions. Powell has spoken at length about these trade policies, voicing concern on multiple occasions that abrupt policy shifts cause market imbalances. That was before this most recent delay.
For us in the derivative space, there is little value in second-guessing further incremental delays. What matters now is calibrating for reduced timelines. Hedging decisions that relied on a July options window must be fully re-strategised, particularly because vol floors are higher as a result of prior false starts. There’s limited utility in pointing out the inconsistency—continuity is not the point here.
Adjusting To New Realities
We should reweight forward volatility across the board. Implied dispersion between indexes and single names widened in the past two weeks, which tells us the market is no longer pricing systemic moves evenly. If this tariff path is again pushed out, the instruments most exposed to cyclical industrials could see repricing risk. Traders who are still running short gamma ahead of earnings clusters may want to examine where their exposure lies—August expiration is a different risk structure entirely.
Pricing in binary outcomes has always been challenging, but when the binary keeps shifting, we need to reframe it. It’s not about expecting action or inaction anymore—it’s about volatility being used as a policy tool. In practical terms, straddle premiums are likely to stay inflated and may offer better short opportunities if historical patterns continue. We must, however, allocate wider greeks buffers than usual. Market makers are recalibrating skew across various major indices as a result.
This coming fortnight, keep your models nimble but stop assuming policy clarity is just around the bend. The evidence says otherwise. August 1 is now the date that holds the market’s gaze, but with the track record so far, conviction should be substituted with flexibility. Return models should reflect this—especially those that depend on directional follow-throughs.
Yields have responded erratically in previous sequences of tariff postponements, and many desks are now building that assumption into curve hedges. For spreads that hinge on equity-linked vol products reacting to macro risk, the tapering of confidence is becoming tradeable. How long this pattern continues depends not just on policy delivery, but also on when pricing stops reacting in earnest to these moving announcements. Until then, protective structures—verticals or calendar spreads—may work best for those with intraday exposure. Keep legs short and exits planned. We’ve learned that much.
