The move came in reaction to a tweet last week from Ottawa's foreign minister, Chrystia Freeland, who said that "Canada is gravely concerned about additional arrests of civil society and women's activists in Saudi Arabia including Samar Badawi".
The Saudi government on Sunday recalled its ambassador from Ottawa, barred Canada's ambassador to Riyadh and placed a ban on new trade, denouncing Canada for urging the release of rights activists.
Analysts say the dispute between Riyadh and Ottawa shows Saudi Arabia won't accept any outside criticism and will continue flexing its muscles overseas, especially as the kingdom enjoys a closer relationship with President Donald Trump.
The Saudi cabinet renewed on Tuesday its rejection of any interference in its internal affairs, Saudi Press Agency reported. In little more than a year, the kingdom has led a four-country coalition that severed ties with neighbouring Qatar, recalled its ambassador to Germany and cut back its trade dealings with some German companies amid a diplomatic row.
Canada is planning to seek help from Saudi Arabia's closest ally, the UAE, and Britain to defuse the dispute which looks set to damage what is a modest bilateral trade relationship worth almost $4 billion a year.
On Tuesday, Saudi Arabia's main wheat buyer, Saudi Grains Organization (SAGO) said in an email sent to Canadian shippers it had halted all purchases of Canadian milling wheat and feed barley.
"It is a significant portion of our barley exports", Dahl said, noting the market had been considered a stable market, noting the industry saw growth potential there given ongoing food sustainability concerns within Saudi Arabia.
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But Saudi Arabian Foreign Minister Adel al-Jubeir tweeted that Canada's position was based on "misleading information", adding that anyone arrested was "subject to Saudi laws that guarantee their rights".
Badawi's wife Ensaf Haidar has been granted asylum by Canada, where she is raising their three children.
The Saudi foreign ministry ordered Horak to leave the country, and called the use of "immediately release" in Canada's tweet "unfortunate, reprehensible, and unacceptable in relations between states". Furthermore, all flights to and from Toronto would be suspended starting August 13, according to state airline, Saudia Airlines.
Within a day, Saudi Arabia expelled the Canadian ambassador, froze all new investment, and canceled all flights to Toronto.
Despite the diplomatic blowback, Freeland has stayed firm on her criticism of the human rights situation in Saudi Arabia. Much of that was tanks, armored personnel carriers and motor vehicles.
Some reports have suggested Saudi government scholarships could be pulled.
But Riyadh's singling out of Canada is aimed at strongly discouraging other critical Western governments from speaking out, observers say.