Market watchers have coined a new "theory" for US President Donald Trump's behaviour around tariffs: TACO - Trump Always Chickens Out. One has to hope this theory holds and he does, or our super funds will be squawking.

Since November last year when Donald Trump reigned supreme in the US elections, we’ve become used to the US President threatening our manufacturing exports, pharmaceutical companies, beef producers and our major export customer, China. While all this is on top of a proposed general 10% tariff, we didn’t expect him to target our super funds!

Yep, that’s the story the AFR’s Lucas Baird is running with today with this headline: “Trump tax hike threatens to raid superannuation savings”.

We could be saved, however, by the TACO theory. Coined by former Trump staffer and flash-in-the-pan media sensation, Anthony Scaramucci. Since his firing by Trump just 10 days into his job as White House Communications Director, the 'mooch (as he was known colloquially at the time) hasn't had anything particularly nice to say about the now two-time President.

Now Scaramucci is levelling up his Presidential observations with "Trump always chickens out"!

Scaramucci insists that Trump “talks big, makes threats, throws tantrums as a negotiating tactic, but he always backs down eventually”. He says that Trump “overplayed his hand” on tariffs and that’s why we’ve seen his 90-day pause with China.

While this most unusual US President went tough last week with threats of a 50% tariff on European Union (EU) products as the punishment for their poor negotiating for a trade deal, and a 25% tariff on Apple if it doesn’t make iPhones in the US, he does know that the stock and bond markets will smash him if he continues overplaying his hand.

Ahead of negotiations with Australia, he has been encouraged by US companies to look at what we might be doing that these big multinationals don’t like. For example, tougher tax treatments for big tech companies that pay low taxes here by being set up in low-taxing countries such as Ireland. But how would our super funds be affected by some possible Trump decisions?

In his article today, Baird explained the following:

1. Big superannuation funds have $400 billion invested in the US.
2. Generally, they don’t pay capital gains tax from these investments.
3. Australian companies are hit with a 30% withholding tax on income sourced from the US but Trump’s “beautiful big tax bill” threatens to increase this to 35%.

Higher taxes will increase costs for superannuation funds and decrease returns for their members. And it could get worse if non-US countries fund managers start to withdraw investment in the US because of Trump’s tactics. This could send stock prices down and would also affect our super fund returns.

Looking at the implications of this tax bill that has been passed by the House of Representatives and is now before the Senate, one has to hope that the TACO theory holds and Trump does chicken out, or our super funds will be squawking.