To fight inflation, that Trump denies exists, comes another round of TACOs.
Understanding TACOs
The term TACO stands for Trump Always Chickens Out. It was created by Financial Times writer Robert Armstrong. TACO describes a pattern of Trump announcing heavy tariffs on countries causing economic shock, panic and stock market hits after which Trump chickens out by reversing course with delays or reductions.
China hit back particularly hard with export controls on rare earth minerals and magnets causing Trump to back down of trial escalations on three occasions.
White House Fact Sheet
On New Years Eve, a White House Fact sheet proclaims Trump Adjusts Imports of Timber. Lumber, and Their Derivatives.
Today, President Donald J. Trump signed a Proclamation invoking Section 232 of the Trade Expansion Act of 1962 (Act) to delay increases in tariffs for upholstered furniture, kitchen cabinets, and vanities for another year.
Earlier this year, President Trump imposed tariffs on imports of timber, lumber, and their derivative products (wood products) to bolster American industry and protect national security.
President Trump has repeatedly used Section 232 tariffs to protect against threats to our national security and to strengthen manufacturing critical for our national and economic security, including on steel, aluminum, copper, and autos.
Lumber, furniture, and kitchen cabinets are a matter of national security along with Hollywood movies, steel, aluminum, copper, autos, and everything else.
Tariff TACOs, Furniture, Kitchen Cabinets
The Wall Street Journal reports Trump Rolls Back Tariffs on Furniture and Kitchen Cabinets
The increased tariffs, announced in September to target lumber-based products, were set to go into effect on Jan. 1, according to a White House statement published on New Year’s Eve.
Import duties on cabinets and vanities were meant to rise to 50% from 25%. Upholstered wooden products, things like sofas and armchairs, were to be slapped with a 30% tariff. The tariff level will now remain at 25% for all the affected items.
Trump promised in August to target the furniture industry for tariffs and bring back manufacturing to places like North Carolina’s Piedmont region, a once vibrant factory hub. The state has lost tens of thousands of furniture-making jobs in recent decades and has struggled to compete with Chinese imports.
Trump’s tariff threat in August sent shares tumbling in companies that import furniture, including Restoration Hardware parent company RH and Wayfair.
Since launching his trade war last year, Trump has watered down tariffs on a host of products and countries. In November, the president rolled back levies on beef, coffee, bananas and dozens of other agricultural goods to address concerns about the cost of living. Many of those food items are hard to produce in the U.S. Tariffs have contributed to significant price rises.
Consumer prices for household furnishings rose 4.6% in November from the year earlier, according to Bureau of Labor Statistics data. There was almost no inflation in the category at the start of the year.
Good News for Spaghetti Lovers
Bloomberg reports US to Cut Tariffs on Imported Pasta, Italy Foreign Ministry Says
The US decided to reduce controversial anti-dumping tariffs on some Italian pasta brands, Italy’s Foreign Ministry said.
The US Department of Commerce made the move before an anti-dumping investigation concludes in March, the ministry said in a statement. Rates that were provisionally set in September dropped to 2.3% for La Molisana pasta, about 14% for Garofalo and 9.1% for 11 other producers, from a previous retaliatory tariff of almost 92%.
La Molisana, Garofalo and others are facing anti-dumping tariffs after being accused of selling their products in the US at artificially low prices. The levies are in addition to the baseline 15% tariff already in place on most European Union exports to America.
The US Department of Commerce couldn’t immediately be reached for comment during the New Year holiday.
What? No Inflation?
Trump says inflation is a hoax. But if it is a hoax, then why the TACOs?
Regardless, the impact of tariffs is less severe than many have feared.
Q: Why have Tariffs been less damaging than initially feared?
A: It’s the TACOs, stupid (plus mitigation, hoarding, and wait-and-see actions).
Tariff Mitigation
From initial announcements of over 50 percent on many countries, and over 100 percent on China, the effective tariff rate is more more like 11.2 percent due to TACOs and mitigations.
Mitigation means rerouting trade from China to Vietnam, India, Mexico, or South Korea.
The US trade deficit with China is down but China’s exports to the rest of the world are up. Some of those imports from other countries are really from China.
Hoarding
Companies engaged in massive front-running of tariffs ahead of the announcements.
This resulted in corporate delays in passing along tariff-related price increases.
Those inventories are now exhausted and companies will start passing on costs.
Meanwhile, there have been so many TACOs and tariff exclusions that huge shocks have largely been avoided.
Small businesses, unable to switch supply chains or store inventory, were hit much harder by the gyrations.
Looking Ahead
I expect Trump to lose his reciprocal tariff tariff case in the Supreme Court.
However, Trump will be quick to resort to other means to reapply them.
The stock market will like refunds if the courts mandate them, but the bond market likely won’t.
I expect a Supreme Court ruling this month but the Court could punt the rebates back to the International Court or Trade. Also, Trump might make the rebate process difficult , resulting in delays.
The tariff case is Win-Lose, but there is a range of outcomes for refunds.
Polymarket
Trump’s odds of winning had a brief Polymarket surge to 32 percent on December 30, 2025 but are back to 26 percent now.
That is in line with my 75 percent chance of Trump losing.
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November 16, 2025: What Are the Odds the Supreme Court Rules Against Trump on Tariffs?
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