People criticize Boeing for it's not offering a more competitive airframe against the CS. However, this is part of what makes the government funding of the BBD plane unfair. If Washington state or the Us government offered to give Boeing billions in optionally paid back loans to develop a 737 replacement that could compete with the CS, they'd probably look at it. I'm sure they'd love to get that sort of help with the 797/MoM. Instead, they have to pay for its development out of pocket or raise the cash through loans and investors, limiting what they can bring to market and how competitive that entry can be.
I have to dispute Boeing's military contracts qualifying as "subsidies". The US military isn't paying them for things they don't need just to give Boeing money. These contracts are for necessary equipment. People have mentioned the Air Force helping fund development of the KC-135 and 707. They didn't do that because they wanted to help develop a new civilian airliner. They did it because they needed a jet tanker, and based on the plane's record, Boeing build them a damn good one, and were compensated appropriately. Boeing was savvy enough to use that to help with the 707, although I would note that the C135/717 airframe did require substantial reengineering (specifically widening to accept an additional seat) to become the C137/707. It was not as simple as putting an airline cabin in the KC 135 and calling it a day. Besides, if the RCAF has a plane they need, want to pay BBD to design and build it for them, and BBD figures out how to sell that on the civilian market, I don't think anyone would object.
I would also note that the defense market has not been as big a part of Boeing's post Korean War history as people like to make it out. In the time between the first gen turbines (B-52, KC-135, CH-47) and the V-22 and KC-46, Boeing has probably been the smallest airframe builder among US aerospace companies. Most of the companies recent offerings (the F-15, FA 18, C-17, and AH 64) all come from their purchase of MD ( who btw are a great example of how DOD "subsidies" are not enough to keep an uncompetitive civil airframe manufacturer afloat). MD, Northrop Grumman, Sikorsky, Bell, and especially Lockheed Martin, have been the major players since probably 1960. Indeed, many analysts have called the upcoming T – X contract a "must win" for Boeing since they have lost every other recent tactical aircraft competition and most, if not all, of their legacy MDD programs are coming to a close soon.
As far as using other industries to target the US in a trade war, I don't pretend to have any particular insight into Canadian politics, but one thing I have been surprised to learn over the last couple days starting to study this issue is how divided the country is. The East West divide somewhat reminds me of the USs north south divide. It sounds like western Canadians will be less than enthusiastic to have their trade (which would seem to include oil) hurt in an effort to support eastern BBD (correct me if I'm wrong, but some articles and comments seem to indicate there already is a fight over oil shipments between East and West Canada). That, plus whatever support WS and AC can drum up thanks to their Boeing heavy order books makes me wonder how united the country actually is against Boeing and for BBD. I don't know what the polls actually say but I'm gonna have to start paying closer attention to Canadian media now.