(Adds steel industry comment)
By Allison Martell
May 31 (Reuters) - Canada will impose retaliatory tariffs on C$16.6 billion ($12.8 billion) worth of U.S. exports and challenge U.S. steel and aluminum tariffs under the North American Free Trade Agreement and the World Trade Organization (WTO), Canadian Foreign Minister Chrystia Freeland said on Thursday.
The Canadian tariffs are set to go into effect on July 1 and stay in place until the United States lifts its own measures, Freeland said, hours after the United States said it would impose tariffs on aluminum and steel imports from Canada, Mexico and the European Union.
"The American administration has made a decision today that we deplore, and obviously is going to lead to retaliatory measures, as it must," Prime Minister Justin Trudeau said at a news conference in Ottawa with Freeland.
"We regret that. We would much rather move together in partnership," he said.
The Canadian government released two lists of U.S. products, proposing a 25 percent tariff on the first list and 10 percent on the second. Freeland said a 15-day consultation period would give Canadians a chance to comment on the tariffs and the products covered.
The list included steel and aluminum in various forms, but also orange juice, maple syrup, whiskey, toilet paper and a wide variety of other products. It largely spares U.S. farmers. Among the few proposed agricultural targets are farm chemicals and cucumbers. (For the lists of U.S. products, see: http://bit.ly/2xtZlkz)
Freeland said Canada would challenge the U.S. tariffs under both NAFTA's Chapter 20 and the WTO's dispute settlement process, and would work with other WTO members.
Canadian Steel Producers Association President Joseph Galimberti said his organization was consulting with members and studying the products covered.
"I think the key going forward is to take this time to make sure that it works for the parties most directly affected and to get those measures in place as soon as we can," he said.
Shares in StelCo Holdings Inc fell 3.5 percent, while the broader Canadian stock index ended up 0.1 percent.
Trudeau also discussed NAFTA talks, saying Canada, the United States and Mexico had come so close to a deal that he had offered to meet personally with President Donald Trump in Washington.
Trudeau said Vice President Mike Pence told him on Tuesday that as a precondition for that meeting, Trudeau would have to agree to a five-year sunset clause. He refused.
A sunset clause would allow one of the three NAFTA members to quit the pact after five years.
"There was the broad lines of a decent win-win-win deal on the table," said Trudeau. ($1 = C$1.2957 Canadian)
(Reporting by Allison Martell; additional reporting by Rod Nickel in Winnipeg; editing by Leslie Adler, Sandra Maler and Jonathan Oatis)