WASHINGTON — Donald Trump once again demonstrated his unpredictable approach to foreign policy with a dramatic shift on Iran, sending shockwaves through global markets and raising fresh questions about the consistency of US strategy.
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After issuing stern warnings over the weekend, including a 48-hour ultimatum for Iran to reopen the Strait of Hormuz or face major strikes, Trump reversed course on Monday by announcing that Washington had instead engaged in talks with Tehran. Posting on Truth Social, he described the discussions as “very productive” and extended a new five-day deadline to allow negotiations to continue.
Traders bet more than half a billion dollars on oil futures in the 15 minutes before US President Trump announced yesterday that the US held two days of “very good and productive conversations” with Iran, reports The Financial Times.
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The sudden pivot had an immediate impact on financial markets. Oil prices plunged sharply, with global benchmarks falling significantly, while US stocks rallied. The Dow Jones Industrial Average surged by 700 points, reflecting investor optimism over a possible de-escalation in tensions.
However, Iranian officials denied that any negotiations were underway, tempering market enthusiasm and adding to uncertainty. Analysts say such reversals have become a defining feature of Trump’s leadership style, often involving bold threats followed by abrupt changes in direction.
Garret Martin, a professor at American University, noted that it is often unclear whether these moves reflect a coherent strategy or improvisation. Critics argue that the pattern undermines US credibility, as both allies and adversaries struggle to interpret Washington’s intentions.
The phenomenon has even earned a nickname — “TACO” (“Trump Always Chickens Out”) — a term coined by Financial Times journalist Robert Armstrong to describe market reactions to Trump’s policy swings.
Read More: Iran rejects Trump’s claims of positive talks
While such shifts can drive short-term market gains, analysts warn they also contribute to long-term instability. Observers suggest the latest reversal may have been influenced by market volatility, regional diplomatic pressure and internal divisions within Trump’s political base over the Iran conflict.