The TACO Trade and Your ETF Portfolio: VOO & SCHD in a Tariff-Fueled Market
Political moves can upset markets overnight. In 2025, American investors watch the news about new tariffs—so-called “TACO trade” moments—shaping stock prices and ETF performance. But how should you react, and what do these changes mean for top funds like VOO and SCHD?
What Is the TACO Trade?
The TACO trade refers to the phrase “Trump Always Chickens Out.” It describes how investors expect President Trump’s tariff threats to fade after initial volatility.
Markets have learned this lesson well. For example, investors saw sharp selloffs whenever tariffs were announced. Often, stocks bounced back when policies softened. Over time, the market grew less sensitive to these threats.
Insert relevant chart or info-graphic about S&P 500 reactions to tariff headlines.
Quick Facts: 2025 Tariffs and Market Moves
- April 2, 2025: Big tariffs spark the worst selloff since 2020.
- April 9, 2025: News of a tariff pause triggers a relief rally.
- June–July 2025: S&P 500 and NASDAQ return to all-time highs.
- Current Trend: Growth forecasts are revised down as prices and frictions increase.
2025 Tariff Impact at a Glance
- Average household loss: $3,800
- Average price hike: 2.3%
- GDP drop for 2025: -0.9 points from tariffs
- Top sectors hurt: Clothing and textiles (+17% price)
How Markets React—and Why It Matters
At first, each new tariff fleet causes stocks to fall.
Yet, rebounds often follow as investors bet the policy will soften.
Every time this cycle repeats, some permanent harm is left behind: earnings weaken and wallets feel lighter.
VOO & SCHD: By the Numbers
Vanguard S&P 500 ETF (VOO) Snapshot
| Metric | Value (July 2025) |
|---|---|
| NAV Price | $573.86 |
| 52-week Range | $441.44 – $578.50 |
| YTD Return | 2.66% |
| SEC Yield | 1.19% |
| Expense Ratio | 0.03% |
| Holdings | 505 |
| Fund Flows YTD | $82B |
| Assets Under Mgt | $1T+ |
Schwab US Dividend Equity ETF (SCHD) Snapshot
| Metric | Value (July 2025) |
|---|---|
| NAV Price | $27.03 – $27.15 |
| 52-week Range | $23.64 – $29.72 |
| Yield | 3.79% |
| Dividends TTM | $1.03 |
| Q2 2025 Div. | $0.26 |
| Expense Ratio | 0.06% |
| Holdings | 100–103 |
| Assets | $70.9B |
SCHD Dividend Calendar
| Quarter | Ex-Div Date | Dividend |
|---|---|---|
| Q2 2025 | 6/25/25 | $0.26 |
| Q1 2025 | 3/26/25 | $0.249 |
| Q4 2024 | 12/11/24 | $0.2645 |
| Q3 2024 | 9/25/24 | $0.7545 |
VOO vs. SCHD: Which Fits Different Investors?
VOO: Growth & Total-Market Exposure
- Covers S&P 500: broad market exposure
- Lowest costs: 0.03% fee
- Big and liquid: $1T+ in assets, tight trading
- Solid long-term growth
SCHD: Dividends & Downside Defense
- Picks 100+ “best” U.S. dividend payers
- Strong yield: nearly 4% in 2025
- Quarterly rising payouts for income
- Defensive, lower market swings
Tariffs and Risks for 2025
Tariffs bring rising prices, lower profits, and potential market dives if the market “gets it wrong.” Key risks:
- Persisting tariffs could drive up inflation by 2.3% or more
- Corporate earnings are under threat, squeezing profit margins for both growth and dividend investors
- GDP shrinkage already showing up in forecasts
- Complacency is risky. If tariffs stick and the market is too relaxed, losses can be swift
Answers to Top ETF Questions
Is VOO still good in 2025?
Yes. It’s top for diversified U.S. stock exposure and low costs—even in rough markets.
What’s SCHD’s dividend yield now?
Approaching 4%, topping most U.S. equity funds—great for income strategies.
How are ETFs affected by tariffs?
Tariffs increase costs, reduce corporate earnings, and may slow the economy—leading to more volatility in broad ETFs like VOO and SCHD.
VOO or SCHD: Which to choose?
VOO excels for total growth. SCHD shines for income and stability. Most investors use both for diversification.
Final Thoughts
The “TACO trade” is more than a meme—it’s a pattern investors now expect. If that pattern breaks, both VOO and SCHD could face real stress. Still, both ETFs remain strong pillars of a U.S. portfolio, and knowing their strengths helps you weather any storm. Stay alert to news, manage risks wisely, and keep building financial knowledge.
References
- https://en.wikipedia.org/wiki/2025_stock_market_crash
- https://www.reuters.com/business/finance/us-stock-market-gains-may-slow-after-torrid-rebound-tariff-swoon-2025-05-16/
- https://budgetlab.yale.edu/research/where-we-stand-fiscal-economic-and-distributional-effects-all-us-tariffs-enacted-2025-through-april
- https://www.goldmansachs.com/insights/articles/us-earnings-will-start-to-show-the-impact-of-trumps-tariffs
- https://investor.vanguard.com/investment-products/etfs/profile/voo
- https://in.investing.com/etfs/vanguard-s-p-500-historical-data
- https://advisors.vanguard.com/investments/products/voo/vanguard-sp-500-etf
- https://etfdb.com/etf/VOO/
- https://www.etf.com/sections/data-dive/voo-tops-most-popular-vanguard-etfs-2025-fund-flows
- https://finance.yahoo.com/quote/VOO/performance/
- https://in.tradingview.com/symbols/AMEX-SCHD/
- https://finance.yahoo.com/quote/SCHD/history/
- https://etfdb.com/etf/SCHD/
- https://stockanalysis.com/etf/schd/
- https://www.wallstreethorizon.com/SCHD-dividend-calendar
- https://www.schwabassetmanagement.com/products/schd
- https://www.nyse.com/quote/ARCX:VOO
- https://www.nasdaq.com/market-activity/etf/voo
- https://www.morningstar.com/etfs/arcx/voo/performance
- https://www.jpmorgan.com/insights/global-research/current-events/us-tariffs
