By Matt Peterson
President Donald Trump's about-face on Wednesday from demanding to own Greenland to settling for a still-undefined deal for access prompted a swift reaction from some political observers: "TACO Tuesdays are back," tweeted the Lincoln Project, an anti-Trump conservative group. "And in true Trump fashion, a day late."
The idea that "Trump always chickens out" has gained currency among many in the markets, too. As the story goes, Trump cares so much about the stock market that he will back off his threats if stocks fall.
But TACO thinking may be a misread of how the president acted on Greenland. Trump isn't afraid of risk. Rather, he embraces it to an extreme degree. Investors who expect Trump to always back off when the markets object may find themselves burned.
If you are desperate for a pithy phrase, a better one is TATER, for "Trump always takes excessive risks." He gets what he wants by going after it louder and more aggressively than anyone expects. Examples abound, including his campaign to get the Federal Reserve to cut rates despite the risk of upsetting the market, as well as tariffs and his attacks on Iran and Venezuela.
But those examples also suggest he understands just what is at stake, since in each he managed just enough restraint to keep the worst-case scenario from coming to pass. He hasn't fired Fed Chair Jerome Powell. Tariffs were turned up to 11, then dialed down modestly. He opted for targeted strikes on Iran and Venezuela rather than all-out war.
In the Greenland case, the risks were to NATO and the web of trade deals he has struck over tariffs. The threats to Trump's tariff deals were a much clearer red line than any market reaction. He wasn't about to wreck his signature policy in a fight over a territory with Europe. Reneging on one deal would call others into question.
To be sure, Trump had the stock market in mind this week. The S&P 500 declined 2% Tuesday, along with other indexes, after he threatened to impose tariffs on some European countries if they didn't give up Greenland. The Europeans threatened to retaliate.
Trump noticed. "I mean, the stock market took the first dip yesterday because of Iceland," he said in his address to the World Economic Forum in Davos, Switzerland, apparently mixing up the Danish territory with the independent island nation. He insisted the market would bounce back.
It did. The S&P gained 1.2% Wednesday after Trump called off the tariffs because he had reached what he called the "framework of a deal" to give the U.S. new access to the territory.
Trump told Fox Business's Mornings With Maria Thursday that he liked the initial reaction to the still-undefined deal. "I noticed the stock market went up very substantially after we announced it," he said.
The S&P 500 closed Wednesday 65 points below its Friday close, before all this started, so whatever was lost wasn't immediately regained. More importantly, these are relatively small, short-term moves in the stock market, which reacts to all kinds of nonpolitical information, too.
The White House flatly denied that Trump was doing any more than watching the market.
"The president does not make decisions that affect our national security based on normal market fluctuations," said White House spokesman Kush Desai. The Greenland deal will help national security and "boost the market's long-run optimism and confidence," Desai said.
Some people close to the president say the same in private. A bigger issue in Trump's mind was likely the possibility of a renewed tariff war with Europe, which is a massive purchaser of U.S. goods and services, they say.
The European Parliament shelved a vote on the plan the administration hashed out last year that would see the U.S. impose 15% tariffs on Europe, while Europe buys U.S. energy and lowers some trade barriers to U.S. goods.
Trump needs that and other tariff deals to head off a midterm meltdown. U.S. growth hit 4.3% in the third quarter driven by strong exports. The Trump team attributes that to his deals opening markets.
Even the most famous episode where Trump backed off at the market's insistence wasn't really about stocks. In April, Trump was forced to pause his new tariffs because the bond market nearly went haywire alongside a sharp selloff in stocks. The Treasury trouble posed a threat to the broader economy, not just Wall Street.
Bond moves around Greenland were modest and likely driven more by a selloff in Japan than what Trump said.
Trump wants the market to go up. But that is about as helpful to investors as the advice that the stock market generally goes up over time -- true over the long run but not a useful guide to short-term decision making.
Trump has a remarkable record of proving his doubters wrong. But there is no guarantee he will always be right. Europe may not restart his trade deal. NATO may be irreparably damaged. A captured Fed might let inflation run wild.
Investors have reacted to that uncertainty by bidding up gold to hedge their portfolios. That makes a lot of sense. Because while Trump may over time make the market go up, on any given day, it's good to have a little insurance for when he picks a TATER over a TACO and the risks start to bite.
Write to Matt Peterson at matt.peterson@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 23, 2026 02:30 ET (07:30 GMT)
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