CANADA LAST NIGHT announced billions of dollars in retaliatory tariffs against the US in a tit-for-tat response to the Trump administration’s duties on Canadian steel and aluminum.

Prime Minister Justin Trudeau’s government released the final list of items that will be targeted beginning tomorrow. Some items will be subject to taxes of 10% or 25%.

Trudeau and US President Donald Trump spoke late yesterday.

“As he has said in past conversations and in public, the Prime Minister conveyed that Canada has had no choice but to announce reciprocal countermeasures to the steel and aluminum tariffs that the United States imposed on 1 June, 2018,” Trudeau’s office said in a statement.

“The two leaders agreed to stay in close touch on a way forward.”

It was their first direct conversation since Trump tweeted that Trudeau was “weak” and “dishonest” after leaving the G-7 meetings in Quebec earlier this month.

Trudeau also spoke to Mexican President Enrique Pena Neito and updated him on Canada’s response to the US tariffs.

The taxes on items including ketchup, lawnmowers and motorboats amount to $12.6 billion.

“We will not escalate and we will not back down,” Canadian Foreign Minister Chrystia Freeland said.

Freeland said they had no other choice and called the tariffs regrettable.

Political impact

Many of the US products were chosen for their political rather than economic impact. For example, Canada imports just $3 million worth of yogurt from the US annually and most of it comes from one plant in Wisconsin, the home state of House Speaker Paul Ryan. The product will now be hit with a 10%.

“This is a perfectly reciprocal action,” Freeland said. “It is a dollar for dollar response.”

Another product on the list is whiskey, which comes from Tennessee and Kentucky, the latter of which is the home state of Republican Senate leader Mitch McConnell.

Freeland also said they are prepared if Trump escalates the trade war.

“It is absolutely imperative that common sense should prevail,” she said. “Having said that our approach from day one of the NAFTA negotiations has been to hope for the best but prepare for the worst.”

Trump has explained the steel and aluminum tariffs by saying imported metals threatened the United States’ national security — a justification that countries rarely use because it can be so easily abused. He is also threatening to impose another national security-based tariff on imported cars, trucks and auto parts. That threat could be a negotiating ploy to restart talks on the North American Free Trade Agreement.

Freeland said there are no grounds for further US tariffs in response to Canada’s actions.

Canadians are particularly worried about auto tariffs because the industry is critical to Canada’s economy. Freeland said such tariffs would be “absurd” because the North American auto industry is highly integrated and parts made in Canada often go to cars manufactured in the US and then sold back to Canadians.

“Any trade action is disruptive on both sides of the border,” Freeland said.