Canada hits back at United States with own tariffs

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Freeland's tough talk came as the Canadian government unveiled a $2 billion package to support the country's steel and aluminium industries.

Last year, approximately 55 percent of Canada's total steel imports came from the US, with the remaining 45 percent split among Brazil, China, South Korea and Turkey.

The Minister of foreign Affairs of Canada Chrystia Freeland said that the country will impose retaliatory duties against the United States of America (USA) from 1 July 2018. "Canada has no choice but to retaliate with a measured reciprocal dollar-for-dollar response".

The direct economic impact from the US metal tariffs and Canada's retaliation - either in terms of economic activity or inflation - are expected to be small.

Senior officials from Canada are lobbying the Big Three U.S. auto makers to stave off the punitive measures and say they are considering all options, including providing financial aid.

Brown-Forman, Jack Daniel's parent company, said in a statement that the price of a 700 ml bottle of whiskey will increase by approximately 10 percent in Europe.

"But equally, we will not back down", Freeland said, emphasizing that the Canadian tariffs are a dollar-for-dollar response.

"Our sense is that the impact on the economy will be small, but could be substantial for the steel industry over time", said Perrault, adding the outcome of Nafta negotiations remains the central question on trade for Canada.

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The economic impact of the latest tariffs fight is minimal compared with a pair of other looming Canada-U.S. trade issues: potential auto tariffs and threats to end the North American Free Trade Agreement, which includes Mexico.

Trump himself has already threatened to slap tariffs on the automotive sector, which could prove far worse for the Canadian economy than the steel and aluminum duties. 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.

Canadians are particularly anxious about auto tariffs because the industry is critical to Canada's economy. Our approach is we will not escalate.

"Donald Trump's willingness to start a trade war over dairy products, which accounts for less than 0.5% of total trade between both countries, amounts to crying over spilled milk and can only lead to job losses on both sides of the border. They are prepared for this", said Dan Ujczo, a trade lawyer in Columbus, Ohio. USA manufacturers that sell in Canada include Larson Boats of Minnesota and Brunswick Corp. of Lake Forest, Illinois.

Bains, the economic development minister, said the support is aimed at helping firms adjust to the hard circumstances while enabling them to continue to innovate along the way.

Foreign Minister Chrystia Freeland announced final measures Friday that take effect Sunday, Canada's national holiday.

"If they said tomorrow those auto tariffs are in place, it becomes a meaningful hit", said Mark Chandler, head of fixed-income research at RBC Capital Markets.

The Canadian government also announced $1.5 billion in subsidies for Canada's steel and aluminum industries.