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.

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.

Trump's proposed move would be crippling for the economy, given Canada sends 75% of all goods and services exports to the United States. "Nothing can be off the table if the U.S. continues to choose to move forward with these punishing tariffs," Trudeau said after meeting the premiers of the 10 provinces to discuss potential responses.