Washington, May 28 (AP) US President Donald Trump wants the world to know he's no “chicken” just because he's repeatedly backed off high tariff threats.

The Republican president's tendency to levy extremely high import taxes and then retreat has created what's known as the “TACO" trade, an acronym coined by The Financial Times' Robert Armstrong that stands for “Trump Always Chickens Out".

Markets generally sell off when Trump makes his tariff threats and then recover after he backs down.

Trump was visibly offended when asked about the phrase Wednesday and rejected the idea that he's “chickening out", terming the reporter's inquiry “nasty".

"You call that chickening out? It's called negotiation,” Trump said, adding that he sets a “ridiculous high number and I go down a little bit, you know, a little bit" until the figure is more reasonable.

Trump defended his approach of jacking up tariff rates to 145 per cent on Chinese goods, only to pull back to 30 per cent for 90 days of negotiations.

Similarly, last week he threatened to impose a 50 per cent tax on goods from the European Union starting June, only to delay the tariff hike until July 9 so that negotiations can occur while the baseline 10 per cent tariff continues to be charged.

Similar dramas have played out over autos, electronics and the universal tariffs that Trump announced on April 2 that were based in part on individual trade deficits with other countries.

In each case, Trump generally took the stock market on a roller coaster. Investors sold-off when the tariff threats were announced as they implied slower economic growth and higher prices, which would hurt companies' profits.

Stocks then rebounded after Trump stepped back.

As of Wednesday afternoon, the S and P 500 stock index was up slightly so far this year. But the index was down as much as 15 per cent on the year on April 8, a reflection of the volatility that Trump's changing policies have created.

He said that approach has led to USD 14 trillion in new investment in the US, a figure that appears to be artificially high and has not been fully verified by economic data.

“Don't ever say what you said,” Trump said with regard to the notion of him chickening out.

“To me, that's the nastiest question.” Trump also said that EU officials would not be negotiating if not for his 50 per cent tariff, saying he usually has the opposite problem of being “too tough". (AP) ARI

Tariff negotiation strategy: repeated high-rate threats then reductions to extract concessions, driving market volatility and leverage. President Trump's trade practice involves announcing very high import tariffs and then reducing or delaying them as a negotiation tactic, keeping baseline tariffs in place while using temporary adjustments to extract concessions. This pattern has caused market volatility-sell-offs when threats are made and rebounds after retreats-and the administration's claim of large investment gains from the approach remains insufficiently verified by economic data.