OTTAWA — Canada is preparing to impose new retaliatory tariffs on U.S. goods after trade negotiations with Washington broke down, creating a major political challenge for Prime Minister Mark Carney’s government.

The federal government is expected to announce its response as tensions between Canada and the United States intensify. Carney has said Ottawa walked away from what it considered a bad trade deal, arguing that Canada cannot accept conditions that would undermine its economic interests or sovereignty.

The dispute has quickly become a central issue in Canadian politics, with opposition Conservatives demanding greater transparency from the government over the U.S. trade negotiations and asking Ottawa to release more details about Washington’s proposals.

Carney’s government is now facing pressure to protect Canadian industries while limiting the economic impact of a renewed trade conflict. Provincial leaders, including Ontario Premier Doug Ford, have also signalled that Canada should be prepared to use its economic leverage.

The escalating dispute could become one of the most significant political and economic tests of the Carney government, with Canadian businesses, workers and consumers closely watching Ottawa’s next move.