Daniel McCarthy, a Phoenix businessman, announced his challenge to Sen. Martha McSally Martha Elizabeth McSallyOn The Trail: Making sense of this week's polling tsunami The Hill's Campaign Report: Presidential polls tighten weeks out from Election Day Mark Kelly: Arizona Senate race winner should be sworn in 'promptly' MORE (R-Ariz.), setting up a potentially bruising and expensive Republican primary in a state the GOP is eager to hold in 2020.

McCarthy announced his intention to seek the Republican Senate nomination in an interview with Phoenix-area television station ABC 15 set to air later on Wednesday.

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Speculation has swirled for months that McCarthy, a cosmetics company executive, could enter the Senate race.

McCarthy was scheduled to meet with Arizona’s Republican Gov. Doug Ducey on Wednesday, but said earlier this week that he had canceled the meeting, citing Ducey’s support of so-called red-flag laws that allow law enforcement officials to temporarily confiscate firearms from people deemed a danger to themselves and others.

“I look forward to communicating with the Governor and all of Arizona about how dangerous this type of policy is,” McCarthy said in a statement Tuesday. “Right now, I am on a listening tour across Arizona. When discussing Red Flag Laws, the consensus is that they are a slippery slope.”

McCarthy’s entrance into the race is likely to be unwelcome news for some Republican insiders, who see Arizona as a must-win state in 2020. The Phoenix businessman is independently wealthy, meaning he could pump millions of dollars of his personal fortune into his campaign.

McSally was appointed by Ducey to fill the seat vacated by the late Sen. John McCain John Sidney McCainCrenshaw looms large as Democrats look to flip Texas House seat Analysis: Biden victory, Democratic sweep would bring biggest boost to economy The Memo: Trump's strengths complicate election picture MORE (R-Ariz.), despite losing in the state’s 2018 Senate election against Democrat Kyrsten Sinema.

Privately, national Republicans have been lukewarm toward McSally, because of her 2018 loss to Sinema, but are also eager to avoid a potentially divisive primary contest. Still, she has the endorsement of President Trump Donald John TrumpFederal prosecutor speaks out, says Barr 'has brought shame' on Justice Dept. Former Pence aide: White House staffers discussed Trump refusing to leave office Progressive group buys domain name of Trump's No. 1 Supreme Court pick MORE and Republican officials are backing her reelection bid.

“Senator McSally has been a champion for Arizona – working to secure the border and lower taxes for hard-working families,” Joanna Rodriguez, a spokesperson for the National Republican Senatorial Committee (NRSC), said.

“She’s received President Trump’s endorsement because she’s the most conservative candidate on the ballot and we look forward to her winning next fall.”

Democrats, meanwhile, fielded a top-tier candidate in the state, former astronaut Mark Kelly, who has proven to be an adept fundraiser and carries significant clout in the state.

Arizona is a top target for Democrats in 2020 as they seek to recapture a majority in the Senate. Trump won the state by less than 4 points in 2016. But Sinema’s win in 2018, as well as that of Rep. Ann Kirkpatrick Ann KirkpatrickArizona Rep. Tom O'Halleran wins Democratic primary Arizona Rep. Ann Kirkpatrick wins Democratic primary Cook shifts 20 House districts toward Democrats MORE (D-Ariz.), who successfully flipped Arizona’s Republican-held 2nd District, has buoyed the party’s hopes of more wins next year.

Election handicappers are already anticipating a competitive race. The Cook Political Report currently rates McSally’s seat among four toss-up contests in 2020. Another handicapper, Inside Elections, also puts the race in the toss-up column.

Arizona Democrats pounced on the news of McCarthy's candidacy on Wednesday, predicting that the looming GOP primary would leave the party's eventual nominee politically damaged.

“Unelected Senator Martha McSally has repeated the same mistakes of her last failed campaign by putting Mitch McConnell Addison (Mitch) Mitchell McConnellDemocratic senator to party: 'A little message discipline wouldn't kill us' House to vote on resolution affirming peaceful transition of power Republican lawyers brush off Trump's election comments MORE and her corporate donors first in Washington, so it’s no surprise she now faces a primary," Brad Bainum, a spokesman for the Arizona Democratic Party, said in a statement.

"Just like last year, the GOP nominee will emerge damaged and shown to be out of touch with Arizona voters who want an independent Senator who works for them.”

--Updated on Aug. 29 at 9:20 p.m.