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Donald Trump likes to project an aura of absolute power. The U.S. president has said he faces no real restraint other than his own “morality”—neither international law nor the views of other nations—as he freely deploys the U.S. military and threatens to reorder trade and nations around the world.

But we have enough data points by now—after more than a year of bellicose ultimatums and outright war—to know that Trump is quite frightened of one force beyond his control: the markets. Trump’s abrupt retreat on Tuesday from his bloodthirsty (and increasingly desperate) threats to destroy Iranian “civilization” following Tehran’s oil-spiking shutdown of the Strait of Hormuz—and his apparent acceptance of terms that favor Iran—is only the latest proof of that.

Donald Trump likes to project an aura of absolute power. The U.S. president has said he faces no real restraint other than his own “morality”—neither international law nor the views of other nations—as he freely deploys the U.S. military and threatens to reorder trade and nations around the world.

But we have enough data points by now—after more than a year of bellicose ultimatums and outright war—to know that Trump is quite frightened of one force beyond his control: the markets. Trump’s abrupt retreat on Tuesday from his bloodthirsty (and increasingly desperate) threats to destroy Iranian “civilization” following Tehran’s oil-spiking shutdown of the Strait of Hormuz—and his apparent acceptance of terms that favor Iran—is only the latest proof of that.

Sudden market downturns, which Trump appears to take as a personal rejection, have been a constant theme of the so-called TACO trade (“Trump Always Chickens Out”). This goes back a little more than a year to his April 2025 announcement of worldwide tariffs; then to Trump’s aborted threat to invade Greenland, reiterated in January of this year; and now his stand-down from the war against Iran.

Trump has said that this will only be a 14-day cease-fire while he negotiates a........

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