That's exactly what they did. They didn't want to escalate the conflict, so they didn't end up using it. It's what they refer to as their "trade bazooka", and it's still around ready to be used.
the other side will never push enough at once to make bazooka style retaliation the correct strategy
That's an argument for capitulation in general: it's not an argument specifically against extending the field of scope to include services.