Last week, the Canadian government publicly took the Saudis to task after the kingdom arrested two women's-rights activists, the latest to be swept up in a government crackdown on activists, clerics and journalists.
Canada's foreign minister, Chrystia Freeland, had tweeted about the arrests on Thursday.
Just two months ago, Saudi women were given the right to drive a auto, yet several of the country's most prominent women's rights activists - including some who fought for years to drive - were arrested earlier this year on national security grounds.
"Canada will always stand up for the protection of human rights, very much including women's rights, and freedom of expression around the world".
In a statement issued by the Saudi Arabian Foreign Ministry, Riyadh slams as "totally false" allegations by the Canadian authorities that recent arrests of several civil society activists were unwarranted.
Amnesty International Canada secretary general Alex Neve said what has happened is a "clear indication that Saudi Arabia remains determined to rebuff and ignore any efforts to improve and address human rights concerns in the country".
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Both campaigned for women's right to drive, which was granted by the Saudi government when it ended a decades-old ban in June, as well as the abolishment of the male guardianship system. Negative impacts of the Saudi Arabian investment and trade embargo may be overshadowed by Canada's higher inflation and better than expected economic growth.
The Saudi Foreign Ministry also said it would freeze "all new business" between the kingdom and Canada. It must be noted that Raif Badawi's wife Ensaf Haidar lives in Canada itself and recently acquired the Canadian citizenship.
Saudi Arabia also suspended all new trade deals worth billions of dollars and recalled its envoy to Canada.
Badawi and another high-profile Saudi women's rights activist, Nassima al-Sadah, were arrested in the kingdom last week, sparking an global outcry.
Bilateral trade deals between Canada and Saudi Arabia surpassed $4 billion a year ago.
The Saudi foreign ministry slammed the Canadian statement, signalling its growing irritation over Western criticism of the kingdom's poor human rights record.
'There isn't a strong bilateral trade relationship and poking the Trudeau government likely resonates with Saudi's hawkish regional allies.
The move is the first since the two countries broke off diplomatic ties in 2016, after Iran allowed protestors to attack and burn the Saudi embassy in Tehran.