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OTTAWA, Dec 17 (Reuters) - The Canadian arm of General Dynamics Corp warned Ottawa on Monday the federal government would incur "billions of dollars of liability" by unilaterally scrapping an agreement to sell armored vehicles to Saudi Arabia.

General Dynamics Land Systems-Canada made the comment in a statement issued shortly after Canadian Prime Minister Justin Trudeau said for the first time that his Liberal government was looking for a way out of the deal.

The comments represented a notable hardening in tone from Trudeau, who previously said there would be huge penalties for scrapping the $13 billion agreement.

Political opponents, citing the killing of journalist Jamal Khashoggi and Saudi Arabia's involvement in the Yemen war, insist Trudeau should end the deal, which was negotiated by the previous Conservative government.

"Were Canada to unilaterally terminate the contract, Canada would incur billions of dollars of liability to General Dynamics Land Systems-Canada," the company said.

"Terminating the contract would have a significant negative impact on our highly skilled employees, our supply chain across Canada, and the Canadian defense sector broadly."

(Reporting by David Ljunggren; Editing by Peter Cooney)

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