Former US President Joe Biden revoked a key permit for Keystone XL in 2021, effectively bringing the privately backed initiative to an end
The revival of the Keystone XL pipeline, a long-delayed infrastructure project designed to transport Canadian crude oil to US refineries, has reportedly emerged as the central theme of the trade talks between Washington and Ottawa, with the Donald Trump administration now claiming to have a preliminary concept for a “new deal” with Uncle Sam’s North American neighbour, signalling potential progress in negotiations with Prime Minister Mark Carney as tensions over tariffs continue to weigh on bilateral relations.
Trump said he had another conversation with Carney on Saturday and that the proposed agreement would benefit American farmers and the broader US economy.
“I spoke to him again yesterday, and we have the concept of a deal that’s going to be great for our farmers, great for our country, and we’ll be fine for that,” Trump told reporters in Dubuque, Iowa.
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Carney also described the conversation as “positive,” saying it built on recent constructive discussions about the outlines of a mutually beneficial trade agreement.
In a post on popular micro-blogging platform X (formerly Twitter) on Sunday, the Canadian prime minister said the proposed deal would create jobs, improve affordability and respect Canada’s languages, culture and sovereignty.
“Our teams will now be working in the coming weeks to deliver that outcome,” Carney wrote.
The latest developments emerge amid both sides attempting to bring back their economic relations to normalcy after Washington and Ottawa imposed billions of dollars in tariffs on each other’s goods in recent months, creating uncertainty for businesses operating across the US-Canada border.
The trade dispute has also become a political issue in several northern US border states, including Michigan and Maine, ahead of Tuesday’s US midterm elections.
In fact, tariffs on Canadian imports have become a point of concern for Republican candidates in these key battleground states. They have already called for an end to the trade war.
Responding to the complaints, the US President, a week back, signed an order removing 50% tariffs on certain Canadian agricultural and forestry products, along with a few other imports, a move that could benefit businesses in states such as Maine.
Trump said last week that a trade agreement with Canada was coming soon.
However, Ottawa had previously reported limited progress in negotiations, despite efforts by both sides to ease tariffs affecting key industries such as steel and automobiles.
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A spokesperson for Dominic LeBlanc, Canada’s minister responsible for trade with the US, offered no additional details on Sunday beyond Carney’s public remarks.
Talking about the Keystone XL pipeline, Trump said on Sunday, “They’re (Canada) going to build the Keystone Pipeline,” adding that Ottawa would finance the project and that the route had largely been determined.
However, it remains unclear how the project could be revived.
Former US President Joe Biden revoked a key permit for Keystone XL in 2021, effectively bringing the privately backed initiative to an end.
Trump had previously suggested in August that the pipeline could be brought back.
The proposed 830,000-barrel-per-day pipeline was designed to transport oil from Alberta’s oil sands to Cushing, Oklahoma, a major US storage hub, before supplying refineries along the Gulf Coast.
Canada is the world’s fourth-largest oil exporter and sends more than 90% of its crude oil production to the US, making energy trade a significant component of the bilateral economic relationship and, most importantly, a strategic leverage for the Carney government to extract a favourable deal from Washington.
The original Keystone XL project was backed by Canada’s TC Energy, which incurred billions of dollars in losses following its cancellation.
The company subsequently spun off its crude pipeline business into a separate entity, South Bow.
South Bow has since proposed the Prairie Connector pipeline in partnership with US-based Bridger Pipeline.
The proposed 550,000-barrel-per-day project would connect Alberta with Wyoming and use some of the Keystone XL pipeline infrastructure already installed on the Canadian side of the border.
South Bow reportedly expects to decide in 2027 whether to proceed with the Prairie Connector project.
