Why is Canada putting taxes on these imports, and how does it work?

With all the talk about changes to American tariffs on steel, aluminum, etc, and retaliatory Canadian tariffs on pickles and mustard (not to mention steel and aluminum!), you might, like me, be a bit confused about how these tariffs actually work, and why Canada is targeting obscure items like licorice, toilet paper and beer kegs. Well, a handy tariff primer from CBC might help a bit.

The first thing to appreciate is that there are import tariffs and export tariffs. In most cases, we are talking here about import tariffs. When a targeted product arrives at the importing country's border, there is a whole load of paperwork to complete before it can continue its journey, and part of that paperwork will now involve an import duty of 10%, 15%, whatever it might be. When the exporting company pays the tariff, the money goes straight into the federal treasury of the importing country, like any other tax, and can be used for general government expenditure. In the case of steel products, cars, etc, where a product might cross the border several times during its production, the duty is technically assessed each time it crosses, although it is possible to apply for a rebate (a "drawback" or "remission") in these cases.

But, as well as "punishing" the exporting country and making life more difficult for exporting companies (with the additional theoretical benefit that the slack will be taken up by the importing country's internal market, with less need of actual imports), import tariffs usually result in higher prices in the local market, as overall production operates less efficiently and as prices are marked up as a result of the tariffs if the distributing companies can not (or will not) swallow the extra cost.

So, anyway, against its better judgement, Canada has decided that it has no alternative but to levy tariffs on various goods imported from the USA in a dollar-for-dollar retaliation (to the tune of some $16.6 billion) for the tariffs the Trump administration levied a month ago on Canadian steel and aluminum, and in an attempt to prevent Trump's further threats of a 25% tariff on cars and other vehicles. Thus, we Canadians find ourselves embroiled in a full-scale trade war, through no fault of our own.

As for why Canada has chosen such disparate and apparently random products to tax, they are actually far from random. The products on which new tariffs are being imposed have been carefully chosen to wreak maximum inconvenience to industries in regions of the USA that are strategically and politically important to Donald Trump and to key Republicans. That's how we ended up with a retaliatory list that includes things like pizza, quiche, strawberry jam, ketchup, mustard, pickles, maple syrup, mineral water, orange juice, chocolate, licorice, bourbon, hair lacquer, toilet paper, paper towels, handkerchiefs, mattresses, lawn mowers, sailboats, etc, as well as just steel and aluminum. So, you can probably expect American-sourced versions of many of these things to go up in price here in Canada.