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.

Canada’s ambassador to Washington said Monday that Canada is prepared to buy more from the United States, in response to President-elect Donald Trump’s concerns about the US-Canada trade deficit.