Trump Tariff Reversal Sparks $6.3B Retail-Driven ETF Rally

• Retail traders propelled a $6.3 billion surge ahead of Trump’s tariff reversal.
• ETFs like SPY and QQQ saw record-breaking inflows during the rally.

On January 23, 2026, markets rebounded sharply after former U.S. President Donald Trump abandoned plans to impose new tariffs on Europe. According to Cryptopolitan, the reversal followed a robust rally driven by retail investors, who poured $6.3 billion into U.S. equities in the two days leading up to the decision. This aggressive buying reflected traders' expectation of a familiar pattern dubbed the "TACO trade," short for "Trump Always Chickens Out."

The S&P 500 erased its earlier losses stemming from tariff-related selloffs, surging 1.2% on the day of the announcement and gaining another 0.6% shortly after. Heavy retail money inflows fueled the sharp recovery, Cryptopolitan reported, demonstrating strong confidence among individual investors in anticipating geopolitical developments.

Major ETFs stood out as key beneficiaries of the rally. Funds such as SPDR S&P 500 (SPY), Invesco QQQ (QQQ), and Vanguard S&P 500 experienced record-breaking weekly inflows from retail participants. These developments underscored a resilient appetite for risk among individual traders, even in the face of continued geopolitical uncertainty.

Retail activity is increasingly reshaping market dynamics. Cryptopolitan noted that retail traders now account for approximately 25% of all trading activity on U.S. exchanges, marking a significant jump compared to prior years. Beyond equities, their influence spans multiple asset classes, with daily trading volumes for shares and options surging over 40% above the five-year average from 2020 to 2025. This rising trend demonstrates the growing role of individual investors in driving market momentum during pivotal political and economic moments.