Trump first announced his tariff policy would begin on April 9. However, after the market fell, he postponed it to July 9, which led to him being nicknamed ‘TACO’ (Trump Always Chickens Out). The deadline has now been pushed back again to August 1, as officially stated. Some see this change as a strategy, recalling past events like the Smoot-Hawley Tariff Act, which showed that tariffs can harm trade.

The Pattern Of Deferrals

In short, we keep seeing the same pattern: an announcement, a deadline, a market reaction, and then a delay. Trump set April 9 as the date. When the market didn’t react well, he quietly changed it to early July. Now, we are looking at August 1. Repeating this process without a different outcome tests traders’ patience. Many have shortened this behavior to the acronym ‘TACO,’ reflecting a growing skepticism in trading circles. His inconsistent track record on tariffs adds to the uncertainty, complicating price predictions. This unreliability creates artificial volatility in derivative instruments that usually follow stable policies. Experts have noted that this method of hinting at tariffs only to postpone them mirrors past economic events, especially the Smoot-Hawley Tariff Act. Many economists see it as an example of how protectionism can harm global trade. Powell has expressed concerns about sudden policy changes causing market imbalances, even before the latest delay. For those in derivatives, it’s not useful to second-guess future delays. What’s important is adjusting for shorter timelines. Hedging strategies that counted on the July options window need to be reconsidered, especially since volatility floors are now higher due to previous false starts. Highlighting inconsistencies doesn’t help—continuity isn’t the focus here.

Adjusting To New Realities

We should adjust forward volatility across the board. In the last two weeks, implied dispersion between indices and individual stocks has widened, indicating that the market isn’t pricing systemic moves equally. If the tariff timeline is extended again, instruments linked to cyclical industrials could face repricing risks. Traders still holding short gamma before earnings may need to reassess their exposure for the August expiration, which carries a different risk profile. Pricing binary outcomes has always been tricky, and if the scenarios keep changing, we need to rethink our approach. It’s no longer about expecting action or inaction—it’s about using volatility as a policy tool. Practically, straddle premiums are likely to remain high, offering better shorting opportunities if past trends persist. However, wider greeks buffers should be used. Market makers are adjusting skew across various major indices because of this. In the coming two weeks, keep your models flexible and stop assuming that policy clarity is just around the corner. The evidence suggests otherwise. August 1 is now the critical date for the market, but given the past record, it’s wise to prioritize flexibility over conviction. Return models should reflect this—especially those reliant on directional follow-throughs. In the past, yields have reacted unpredictably to tariff delays, and many desks are now incorporating that assumption into their curve hedges. For spreads dependent on equity-linked volatility responding to macro risks, decreasing confidence is becoming a trading opportunity. The duration of this pattern will rely not just on policy actions, but also on when pricing stabilizes amidst these fluctuating announcements. Until then, protective structures—like verticals or calendar spreads—may be best for those with intraday exposure. Keep your positions short and plan your exits. We’ve learned that much. Create your live VT Markets account and start trading now.

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