Repeat of the “April Crash, May TACO” Rally? As Trump Softens on Tariffs, Analysts Say Buy the Dip Begins Now

TradingKey - Less than two days after U.S. stocks plunged on renewed U.S.-China trade tensions and President Trump’s threat to impose 100% tariffs on Chinese goods, both Trump and Vice President J.D. Vance abruptly shifted tone — reigniting the “TACO trade” (Trump Always Caves Out). Analysts say the selloff has created a buying opportunity, with markets now “backing up the truck.”

On Friday, October 10, escalating trade fears triggered a market rout reminiscent of April’s crash, as the S&P 500 and Nasdaq Composite posted their worst single-day losses in six months. 

After the close, Trump posted that they will impose a 100% tariff on goods from China and the meeting with President Xi is no longer necessary.

Financial markets reacted sharply — but analysts quickly pushed back, calling the move a negotiation tactic, not a policy shift. They argued the “TACO trade” — where Trump issues aggressive threats only to retreat under pressure — would soon play out again.

The TACO trade became a Wall Street meme in May, describing how Trump often escalates rhetoric before backing down, creating volatility that savvy investors can exploit: sell the fear, buy the relief.

Markets’ prediction came true within 48 hours. On Sunday, October 12, Trump softened his stance:

“Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!”

Vice President J.D. Vance echoed that this is a game that must be played carefully, depending on how China responds. President Trump values friendship with China and hopes they choose the rational path.

Analysts: This Is the Buy Signal

The swift pivot eased fears of a full-blown trade war. CNN noted that Trump’s reversal suggests he may never follow through on the tariff threat.

On Monday, October 13, Asian trading saw:

• S&P 500 and Nasdaq futures up over 1%
• Chinese A-shares and Hong Kong stocks rebounding after early losses
• Crypto markets staging a strong recovery: Bitcoin +4%; Ethereum +11% in 24h; BNB +16%

Roundhill Investments said that investors have seen this movie before. The instinct remains: buy the dip. After a long rally, markets need a reason to cool off — and Trump’s tariff headlines provided it.

Pepperstone added that the key question is whether new tariffs will actually be imposed. If this is just another negotiation tactic, the current pullback could prove to be a golden buying opportunity.

“Dip-buying strategies are likely to prevail here,” said Buffalo Bayou Commodities.

A Negotiation Game Before the November Truce Deadline

Anna Wu, strategist at Van Eck Associates, said this looks less like April’s spiral and more like a pre-deadline bargaining phase ahead of an expected November ceasefire. Wu believes Friday’s sell-off was an overreaction now being corrected.

CICC agreed, noting that both sides have strong incentives to avoid mutually destructive tariffs. A return to talks and a partial deal is highly likely.

They highlighted key differences from April:

• Market sentiment is more resilient
• Macro backdrop is stronger
• Policy environment favors compromise

Minsheng Securities argued the current situation resembles May, not April:

• April: Tariffs escalated uncontrollably until market pain forced U.S. concessions
• May: Post-initial talks, both sides avoided derailment; tensions eased after a presidential call

With Trump signaling caution and China responding calmly, markets are increasingly pricing in another TACO moment.