Outgoing Canadian Prime Minister Justin Trudeau announced Thursday the formation of a Canada-U.S. relations council to support the federal government as it deals with incoming U.S. President Donald Trump’s threat to impose a 25% tariff on all imports from Canada.

The government is preparing for the possibility that the incoming U.S. administration will impose high tariffs on Canadian goods, setting the close allies up for a showdown.

When President-elect Donald Trump recently floated the idea of annexing Canada, a key reason he gave was a claim that the United States was “losing $200 billion a year” to its northern neighbor.