The UK and EU failed to resolve their differences over Northern Ireland’s trading arrangements in crunch talks on Thursday, further risking a diplomatic crisis and potential trade dispute.

Foreign Secretary Liz Truss told European Commission Vice-President Maros Sefcovic on a call that current arrangements are causing “unacceptable disruption to trade,” leading to people in Northern Ireland being treated differently to those in mainland Great Britain, according to a readout of the discussion emailed by the Foreign Office.

Sefcovic “confirmed that there was no room to expand the EU negotiating mandate or introduce new proposals to reduce the overall level of trade friction,” according to the statement. Truss, for her part, “noted this with regret and said the situation in Northern Ireland is a matter of internal peace and security for the United Kingdom, and if the EU would not show the requisite flexibility to help solve those issues, then as a responsible government we would have no choice but to act.”

Increasing tensions between the two sides over the Brexit deal that came into force at the beginning of last year threaten to break into a trade war if Truss and Sefcovic aren’t able to reach an agreement. Prime Minister Boris Johnson’s government has long expressed discontent with the deal, but now argues there’s cause to take unilateral action because of the disruption to internal UK trade and to the formation of a new power-sharing government in Northern Ireland. That in turn would be likely to trigger infringement procedures by the EU to suspend their trade agreement.

Unilateral action by the U.K. “is simply not acceptable,” Sefcovic said in a statement following the call with Truss. That would “undermine trust” with the EU and “will also undermine the conditions which are essential for Northern Ireland to continue to have access to the EU single market for goods.”

Thursday’s call took place just two days after Sefcovic said that renegotiation of the so-called Northern Ireland Protocol, which established the trading arrangements, isn’t an option. That followed reports that the UK is preparing domestic legislation designed to override large parts of the deal. Truss later issued the UK’s most strongly-worded statement yet on the issue, criticizing the EU’s proposals as insufficient to resolve the standoff, and in some cases taking the situation “backward.”

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The protocol is aimed at keeping goods moving between Northern Ireland and the Republic of Ireland, but also establishes fresh checks on trade between mainland Great Britain and Northern Ireland. It’s now threatening the region’s power-sharing government established under the 1998 Good Friday Agreement, because the Democratic Unionist Party, which came second to the nationalists Sinn Fein in last week’s Assembly elections, has said it won’t nominate a deputy first minister until “decisive action” is taken over the deal.

Johnson and Truss will hold further discussions to consider whether the UK takes unilateral action, a spokeswoman for Johnson said late Wednesday. She downplayed reports that he is due to give a speech on Northern Ireland next week, saying he would likely focus on the impasse in the region’s executive and legacy issues rather than the Brexit deal.

The UK’s attorney general, Suella Braverman, has advised Johnson that it would be legal to scrap parts of the Brexit deal for Northern Ireland, the Times newspaper reported late Wednesday, citing unidentified sources.

A delegation of cross-party UK politicians is heading to Brussels Thursday as part of the first meeting of the UK-EU parliamentary assembly, set up under the Brexit agreement. Cabinet Office Minister Michael Ellis is due to repeat the UK position to the European Parliament—that Britain will continue to negotiate, but if solutions aren’t found action will be taken, according to a statement.