US President Donald Trump has once again reached for his favorite economic weapon, threatening to impose tariffs on 14 countries, ranging from Japan to Bosnia and Laos. The new tariffs, which could reach as high as 40%, are set to take effect on August 1. This time, however, global markets remained unfazed.

Japan’s Nikkei 225 not only held steady but actually added 0.3%. South Korea’s Kospi jumped by 1.8%. Europe maintained a tone of diplomatic poise, with the STOXX 600 ticking down just 0.09%. Meanwhile, Wall Street was in rally mode. This all came after blunt letters threatening tariffs were sent to nearly half the world. So, where is the panic?

The answer may lie in a familiar investment playbook: the TACO trade. This new Wall Street term is short for "Trump Always Chickens Out." When the president describes a deadline as "firm, but not 100% firm," markets conclude that there will be drama but no follow-through.

According to analysts, most investors had already priced in a scenario where tough talk is followed by a strategic retreat. The absence of letters to key economies such as the EU, India, and Taiwan suggests they may either be next in line or already engaged in behind-the-scenes talks aimed at avoiding escalation.

Economists note that even if tariffs climb from 15.5% to 17.3%, it would hardly be apocalyptic. Past experience shows that US consumers typically take it in stride, while Trump is quick to funnel tariff revenue into economic stimulus.

European diplomats are not in panic either. According to them, Washington is open to a deal. The tentative structure envisions a 10% baseline tariff, with exemptions for certain goods such as alcohol and aircraft. Of course, everything depends on the shifting winds of White House sentiment — in other words, on Trump’s next move.

Still, experts such as Tony Meadows of BRI Wealth Management caution that while markets may be drifting along on the tariff seesaw, duties ultimately act as a tax on the real economy. And once the flywheel truly gains momentum, the ride could turn turbulent.

For now, equity markets are treating this as just another episode of the trade game. Bets are growing that it will all blow over. However, maybe this time, the script will have a surprise ending.