Prime Minister Mark Carney has ordered Canada's trade negotiating team to suspend talks with Washington, marking a sharp escalation in the dispute between the two countries.

Ottawa said the decision followed last-minute changes to the U.S. negotiating position that Canada considered unfair and uneconomic. The move came as the United States proceeded with new 50% tariffs affecting about $20 billion of Canadian goods.

Carney has promised that Canada will respond “dollar for dollar”, signalling that Ottawa is prepared to impose matching measures rather than accept what it considers an unfavourable trade arrangement.

The political stakes are significant. The dispute could affect the future of the Canada-U.S.-Mexico trade framework, while Canadian businesses and workers face renewed uncertainty over access to the country's largest export market.

For Carney's government, the decision also represents a test of its strategy of combining negotiations with Washington with efforts to reduce Canada's economic dependence on the United States.

The suspension of talks is expected to increase pressure on Ottawa to strengthen trade relationships with other international markets while protecting Canadian industries affected by U.S. tariffs.

The latest confrontation could become one of the most important political and economic tests of Carney's government, particularly as opposition parties scrutinize Ottawa's response to Washington.