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Michael Segal's avatar

The optimistic scenario is that the tariffs will mainly be a substrate for deals, with leaders making pilgrimages to the White House to pledge changes that earn exemptions. But China will not be eligible because the rational use of tariffs is threefold:

1. To curb countries with a military posture against the USA

2. To ensure that the USA has capabilities that would be needed in case of war or pandemic, either domestically or from trusted partners (e.g., aluminum made in Quebec using its comparative advantage of having James Bay hydroelectric power).

3. To press other countries to reduce actual tariffs, as enunciated by Elon Musk for low tariff trade with Europe.

We don't always get the optimistic scenario, but we should not be shocked if good sense prevails, and we see world leaders coming to Trump to plead for deals.

The visits started today, with Israel's PM meeting with Commerce Secretary Lutnick. Stay tuned.

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