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.

Outgoing Canadian Prime Minister Justin Trudeau says prices for Americans will go up if President Donald Trump follows through with his vow to apply sweeping tariffs on Canadian products.

U.S. President Donald Trump has threatened to impose a punishing 25 per cent tariff on everything imported to the U.S. from Canada. In return, the Canadian government says it would impose retaliatory tariffs of its own on U.