OTTAWA — Canada has announced a major $7.5 billion support package for workers and businesses as the country responds to a sharp escalation in the Canada-U.S. trade dispute.

The federal government said it will impose dollar-for-dollar counter-tariffs on selected U.S. products beginning September 8, matching new American tariffs that took effect August 22. The Canadian measures will cover about $27.6 billion in U.S. imports, targeting products including steel, appliances, dairy, agricultural equipment, pulp and paper, and electronics.

Alongside the tariffs, Ottawa announced $7.5 billion in new and enhanced support measures designed to help companies manage cash-flow pressures and protect workers affected by the trade conflict.

The package includes additional funding for small and medium-sized businesses, a new liquidity stream through the Business Development Bank of Canada and expanded assistance for tariff-affected industries. Ottawa is also introducing $3.5 billion in worker and employer support, including employment-insurance flexibility, workplace training and a worker-retention program.

The move comes after Canada suspended trade negotiations with Washington, saying the latest U.S. demands were not in Canada's economic interests.

The measures mark a significant escalation in the trade dispute and could have major consequences for Canadian manufacturers, exporters, workers and consumers as Ottawa attempts to shield the domestic economy.