Exclusive interview with former WTO Chief Economist Koopman: Trump won't change, but midterm elections may alter the TACO deal | Boao Time

From “reciprocal tariffs” to the Middle East conflict, the flip-flopping in Trump’s policy approach has left traders feeling exhausted.

Whenever U.S. stocks, crude oil, and U.S. Treasury yields hit certain thresholds, the White House’s rhetoric shifts toward a softer tone, and the market immediately reacts to President Trump’s “TACO moment” (Trump always chickens out). From “reciprocal tariffs” to this round of the Middle East conflict, Trump’s policy inconsistency has tired out traders.

During the 2026 annual meeting of the Boao Forum for Asia, Robert Koopman, the former chief economist of the World Trade Organization (WTO) and former head of the Economic Research and Statistics Division, and a professor at American University, said in an exclusive interview with First Finance and Economics that Trump will not change his way of doing things, but the midterm elections will bring uncertainty to TACO.

He also said that although the two safe-haven assets—the U.S. dollar and gold—have moved in different directions during the Middle East conflict, the dollar will still weaken over the long term, and gold prices will still rise somewhat.

Koopman previously served as chairman and chief economist of the U.S. International Trade Commission during the Clinton and Obama administrations. Regarding the large-scale 301 investigation recently launched by the United States, he believes it has “fundamentally changed nothing—only added uncertainty for businesses,” and warned that no one should underestimate the resilience of international trade.

Midterm elections could change TACO trading

Fearing an escalation in the Middle East conflict, U.S. stocks suffered their most aggressive selloff in months on the local trading day of the 26th. And just 11 minutes after the close, Trump posted on social media saying that “at the request of the Iranian government,” he would delay his “destruction” actions targeting Iran’s energy facilities by 10 days, and added that related negotiations were under way and that progress was “very smooth.” Soon after, the U.S. Dollar Index surged rapidly after the close. After WTI crude oil briefly plunged, it rebounded quickly.

When asked about the sustainability of TACO, Koopman said Trump would continue with inconsistent policies, but the upcoming midterm elections would cast doubt on TACO’s staying power.

“I don’t think he’ll change during his term. He is simply like this—acting on instinct, with no interest in deep discussion or scenario planning, and he has no plans to change his operating style. He is firmly convinced that he has the right solution, and his supporters are equally convinced of that.” Koopman said.

But he also emphasized that if, after the midterm elections, the balance of power in Congress changes, then even if Trump still tries to unilaterally change the United States’ policies toward the world, his actions may be blocked by Congress—while the market will re-examine whether it can bet on TACO again. “If Congress can successfully limit his power, then there will be no ‘backing off,’ because he simply cannot make dramatic changes in policy without Congress’s support.” he said.

With about seven months left until the midterm elections, a recent Ipsos poll shows that, driven by the Middle East conflict’s impact on surging oil prices, Trump’s approval rating has fallen to 36%, the lowest point since he returned to the White House. Even so, Democrats’ approval rating has not risen. Based on a poll of 1,272 U.S. adults, about 38% of registered voters believe Republicans are better able to manage the U.S. economy, while only 34% believe Democrats are better.

Multiple forces weaken gold

During this round of the Middle East conflict, the U.S. dollar and gold—long seen as safe-haven assets—moved in opposite directions. Since February 28, the U.S. Dollar Index rose as much as 2.78% to 100.54, and as of the time of publication it still held a gain of nearly 2.3%. London gold prices, meanwhile, fell 16.03% to $4,429 per ounce, almost wiping out all gains made so far this year.

“This is a complex and highly unusual situation.” Koopman believes that behind the “two different worlds” in the dollar and gold charts are the combined effects of two forces. On the one hand, gold is not an interest-bearing asset; holding gold is purely speculation on fluctuations in gold prices. At present, people expect real interest rates to remain at high levels, so yields on Treasuries are rising, prompting investors to shift asset allocation toward higher-yield assets. On the other hand, as the stock market declines, hedge funds holding leveraged positions have had to liquidate the most liquid assets they hold—namely, gold—in order to maintain their positions. These two forces have jointly weakened gold’s standing.

Regarding the long-term trend of gold and the U.S. dollar, Koopman said that although there has been a recent rebound, the dollar will not strengthen for the long run, and gold prices will not stay low indefinitely. Because there is significant uncertainty about the United States’ ability to service its debt, if the U.S. plans to resolve its debt through inflation, then holding gold becomes a better choice. “In the long run, gold prices will face upward pressure again, but given how much they have already risen, I’m not sure whether they can return to the previous peak levels.” Koopman said.

Still bullish on international trade prospects

As the Middle East conflict drags on, a large-scale 301 investigation launched by the U.S. government has once again injected uncertainty into global trade. On March 19, the WTO released its latest report, Global Trade Outlook and Statistics, stating that in this scenario of high energy prices, the real growth rate of global merchandise trade volume would be only 1.4%. In 2026, the growth rate of services trade is also expected to slow to 4.1%.

Asked about the outlook for global trade, Koopman said not to underestimate the resilience of global trade, and emphasized that tariffs are not the decisive factor affecting global trade growth.

“The impact of tariff changes on global trade growth accounts for only 25%, while other factors—especially economic growth—account for about 66% to 75%.” he added: “Even if you raise tariffs, improvements in transportation efficiency and other factors that improve trade efficiency and reduce trade costs, as well as exchange-rate fluctuations, can offset the impact caused by tariff increases.”

He further explained that although the United States is large in terms of scale, other countries in the world are pursuing “risk isolation” in their trade with the United States, and are working to maintain trade relations with other countries under WTO rules—“a situation the U.S. doesn’t like.”

According to WTO research, after experiencing volatility triggered by unprecedented policy changes before 2025, by the end of February 2026, the share of trade conducted under the most-favored-nation (MFN) principle in global trade had rebounded to 72%. This analysis confirms that in most sectors of the global economy, MFN remains the dominant framework for regulating international trade.

Asked about how the current Middle East situation may affect global trade, Koopman said it is still difficult to predict when the conflict will end.

“Looking at history, whether it’s the pandemic or the Russia-Ukraine conflict, prices of major commodities often spike. The damage that such shocks do to the global economy largely depends on how long supply disruptions last.” But he added that businesses and the global trade system have shown remarkable capacity to respond to constrained energy supply. If the Middle East conflict continues, energy costs will soar, but businesses and global trade flows will also have more motivation to seek mitigation measures. “In any case, I think one of the long-term effects of this event will be to accelerate the green transition. Many countries will realize that investing in wind power, solar power, and other alternative energy sources can help reduce dependence on this turbulent region of the world.”

The results of the 301 investigation may be changed

On March 27, a spokesperson for the Ministry of Commerce responded to reporters regarding two trade barrier investigation cases launched against the U.S., saying that the U.S. Trade Representative launched two separate 301 investigations: on March 12 Beijing time, on the grounds of “excess capacity,” against 16 economic entities including China; and on March 13 Beijing time, on the grounds of “failure to effectively prohibit imports of forced labor products,” against 60 economic entities including China. China strongly opposes this, expressing strong dissatisfaction and a resolute opposition.

To firmly safeguard the interests of China’s relevant industries, in accordance with the relevant provisions of the Foreign Trade Law of the People’s Republic of China and the Rules for the Investigation of Foreign Trade Barriers, regarding the two 301 investigations against China, on March 27 the Ministry of Commerce released two announcements to the public, respectively addressing the U.S.’s practices and measures that disrupt global production and supply chains, and the U.S.’s practices and measures that hinder trade in green products. It launched two reciprocal trade barrier investigations.

Regarding how to view the prospects of the 301 investigation, Koopman said the 301 investigations currently being carried out by the United States are, in essence, an alternative to imposing large-scale tariffs collected under the International Emergency Economic Powers Act. “Fundamentally, it changes nothing—it only increases uncertainty for businesses.”

“There are two forces that could change the outcome,” Koopman explained. “First, given how broadly the current ‘301 provisions’ are being applied, the court might rule that this approach is not the correct interpretation of them or that the scope of application is too broad. Second, invoking ‘301 provisions’ to levy tariffs involves complex procedures, including investigation, consultation, determination, and remedies. During the public consultation phase, businesses and other interested parties will push the government to adjust its policies on its own.”

He gave an example: “The U.S. once planned to charge a maximum fee of $1 million when vessels operated by specific operators enter U.S. ports. But during the consultation phase, many U.S. companies complained, ‘Look at the real economic impact that your self-righteous ‘good policies’ bring—this is a disaster for many of us,’ and that led to major changes to the final measures.”

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