Canada is drawing up plans for extensive tariffs against US products if Donald Trump follows through on his threat to put 25% levies on Canadian goods, according to people familiar with the matter.

Canada imported $320 billion in U.S. goods in the first 11 months of 2024, nearly equaling the European Union’s $341 billion. A U.S. 25% tariff could reduce Canada’s GDP by up to 3.8%, with retaliatory tariffs amplifying the impact to as much as 5.

Canadian Prime Minister Justin Trudeau said Thursday that President-elect Donald Trump’s comments about turning Canada into the United States’ 51st state are just a distraction from the consequences of Trump’s tariff threats.