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.

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.