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 bigger deal. And it was unclear whether the cease-fire would hold as Israeli Prime Minister Benjamin Netanyahu—who is believed to be unhappy about what he may consider a premature end to hostilities—continued his attacks on Lebanon. That has led to questions about whether Tehran would completely open the strait.

But make no mistake: After starting a 40-day war with no real provocation, Trump blinked more than Tehran did.

The Iranian regime is intact—devastated, of course, but still controlling the Strait of Hormuz and now demanding payment for passage through it, which it didn’t do before—and Trump has plainly lost his taste for war (this one, at least). The president’s uber-truculent defense secretary, Pete Hegseth, made that clear at a news conference on Wednesday when he repeatedly referred to the war in the past tense, saying that “Operation Epic Fury was a historic and overwhelming victory.”

Trump even suggested on Truth Social on Wednesday, a day after threatening to wipe out Iran’s “civilization,” that the Islamic Republic (the same regime, in other words) could now “start the reconstruction process.” Trump, Hegseth, and others in the administration are suggesting that they’re dealing with a new and better regime, but in fact, it appears to be just another Khamenei—Mojtaba, the son of the assassinated former Supreme Leader Ali Khamenei—who is now calling the shots, according to Axios.

And there is a deeper meaning to TACO that is illuminated by the kind of person—and president—who Trump likes to describe himself as: He’s a businessman first and foremost. For Trump’s entire life, his self-worth has been bound up in financial wealth: creating it, flaunting it, bragging about it. In Trump’s earlier career, this involved an ongoing obsession with how many billions of dollars he was worth. But a similar outlook dominates his presidency as well: Trump sees himself as the president who will restore American greatness through prosperity. He regularly refers to “his” Dow Jones and S&P 500 as barometers of his success at bringing the United States to a new golden age. He views inflation and high interest rates as a personal affront.

But this self-identity with market success may also be Trump’s Achilles’ heel. Whenever the markets shun him on policy, the president appears to shrink from whatever he’s up to like a snubbed suitor.

Trump’s main enemy isn’t Iran, or China, or Russia, or even the European allies that he despises so much. It’s an amorphous entity that circumscribes the globe—that ectoplasmic monster known as global finance and the ever-threatening “Sell America” sentiment that is often its face, along with international energy pricing that Trump doesn’t seem to comprehend. And there is little that Trump can do to control it.

The arc of his behavior is almost always the same: weeks of belligerent demands, followed by the sudden deflation of Trumpian bluster as the markets rebel, followed in turn by a declaration that he now has a “deal.” Then, typically, he moves on and rarely mentions the issue again.

Compare the pattern of Trump’s threats against Greenland to what has just happened over the past month against Iran. Late last year and early into 2026, Trump delivered weeks of threats to “take” Greenland “one way or another.” Soon after he began suggesting that he might invade militarily, global markets plummeted, wiping out more than $1.2 trillion in value on the S&P 500 and prompting a renewal of the “Sell America” sentiment that dogged Trump after he announced his tariffs a year ago.

The markets calmed only after NATO Secretary-General Mark Rutte intervened at the World Economic Forum in Davos, Switzerland, and Trump abruptly announced that he had a “framework” for a deal that would give U.S. forces access to the island (which, of course, they already had). This week, while expressing renewed frustrations over the reluctance of NATO countries to help with his unprovoked war against Iran (which they weren’t consulted on), Trump brought up Greenland again for the first time in months.

But he only appeared to confirm that the supposed framework deal for Greenland wasn’t very far along. “It all began with, if you want to know the truth, Greenland,” he said at a White House press conference on Monday, referring to his unhappiness with NATO. “We want Greenland. They don’t want to give it to us. And I said, ‘bye, bye.’”

But he probably won’t be tangling with the markets again over that issue any time soon.

Similarly with Iran, hubris and narcissism swiftly ran into reality on Wall Street. After starting his war under the delusion that it would be swift and neat and that somehow Iran wouldn’t do what Trump’s own intelligence officials said it would do, which is to close the Strait of Hormuz—indeed, what U.S. intelligence officials have predicted for decades—Trump was suddenly confronted with a record spike in gas prices, a crisis in fertilizer and other petroleum products, and repeated market downturns. These were followed by mini-surges in the markets every day that Trump suggested he might end the war soon.

There were, of course, other important factors at play besides markets. In the case of Greenland, the major NATO countries showed remarkable unity in standing up to Trump and defending Denmark’s right to sovereignty over Greenland, even threatening to send troops.

Similarly with Iran, Trump’s threat to destroy Iran’s power plants and bridges—possibly causing many thousands of civilian deaths as a result—and his Tuesday morning statement that a “whole civilization will die tonight” caused a backlash inside his own political party as well as recrimination around the world.

But as always, it appeared to be money that was most on Trump’s mind. In 40 days, he’s gone from saying that he was the only president brave enough to actually attack an “evil” regime of “lunatics”—and clearly planning for its end—to suggesting that he might want to work with Tehran by dunning ships going through the strait for money. “We’re thinking of doing it as a joint venture,” Trump told ABC’s Jonathan Karl on Wednesday.

In his Truth Social post on Wednesday, the president made it doubly clear who his main target audience is.

“A big day for World Peace! Iran wants it to happen, they’ve had enough! Likewise, so has everyone else!” he wrote. “Big money will be made. … Just like we are experiencing in the U.S., this could be the Golden Age of the Middle East!!! President DONALD J. TRUMP.”