Polymarket Traders Lose Millions as Trump Reverses Tariffs on EU and Greenland

TLDR

Table of Contents

Trump’s reversal on Greenland tariffs shook Polymarket traders, causing large losses.
“TACO trade” caused a dramatic drop in Greenland acquisition odds on Polymarket.
Traders who bet on “Yes” for Greenland acquisition suffered steep losses after tariff rollback.
Crypto markets rallied as risk sentiment improved, benefiting from a tariff reversal.

Several traders on Polymarket suffered notable losses after President Trump reversed his stance on tariffs related to the European Union and Greenland. The situation unfolded quickly, as the so-called “TACO trade” — Trump Always Chickens Out — has resurfaced, shaking up both political markets and crypto sentiment.

Trump’s Tariff Proposal and Reversal

In January 2026, President Trump announced his plan to impose a 10% tariff on eight European nations. This was to take effect by February 1, 2026, with a potential increase to 25% by June, contingent upon an agreement on Greenland. The move immediately stirred negative reactions in markets as traders adjusted positions in anticipation of higher trade tensions.

However, just days later, Trump reversed the policy, choosing not to impose the tariffs. Instead, he cited the success of discussions with NATO leaders as the reason for the shift. The president expressed confidence that a deal on Greenland would be reached without escalating trade conflict.

In a statement on Wednesday, Trump explained, “Based upon a very productive meeting that I have had with the Secretary General of NATO, Mark Rutte, we have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region.” He went on to state, “I will not be imposing the tariffs that were scheduled to go into effect on February 1st.”

The TACO Trade Resurfaces

The term “TACO trade” was first coined in May 2025 by Financial Times columnist Robert Armstrong. It represents a cycle where Trump makes extreme policy threats that negatively affect markets, only to backtrack later, causing those markets to recover. This pattern had already been observed in April 2025, following Trump’s announcement of sweeping tariffs. The tariffs initially triggered market chaos but were later scaled back.

The January 2026 tariff announcement followed the same cycle. The policy shift and subsequent reversal sent waves through prediction markets, particularly Polymarket. Traders had been speculating on the likelihood of Trump acquiring Greenland by 2027, with the odds initially at a higher level. The news of the tariff rollback caused these odds to plummet, shifting the market’s position dramatically.

Losses for Polymarket Traders

The abrupt shift in Trump’s stance left many Polymarket traders in the red. The market for the question, “Will Trump acquire Greenland before 2027?” had dropped significantly to just 11%. Traders who had placed large bets on a “Yes” outcome saw heavy losses.

One prominent trader, known as GamblingRuinsLives, had wagered $105,000 on the positive outcome. This trader’s position lost nearly half of its value, leaving them with only $56,300 of their original investment. Another trader, identified as opticnrvs, experienced even steeper losses, shedding over $91,000.

Traders who had bet on a “No” outcome, predicting that Trump would not acquire Greenland, saw more favorable results. Their positions profited from the dramatic reversal in political events.

Broader Market Reactions and Crypto Rally

While the sudden policy shift wreaked havoc on prediction market traders, it also boosted investor sentiment in broader financial markets. The rollback of the tariffs signaled a potential reduction in global trade tensions, contributing to a shift in risk appetite.

As a result, crypto markets rallied, with all of the top 10 cryptocurrencies experiencing modest gains. According to BeInCrypto Markets data, the total crypto market capitalization increased by 1.5% within 24 hours, suggesting that risk-on sentiment was back.

Despite the losses in political betting markets, the crypto sector is experiencing a resurgence. Investors seem to have shifted their focus to the positive market sentiment, signaling a broader recovery across risk assets.