Trump Has a New Idea for Canada: A Trade Deal Built Around an Old Oil Pipeline

U.S. President Donald Trump now says Washington and Ottawa had a preliminary framework for a new trade agreement with Canada that could include reviving the Keystone XL oil pipeline, a project abandoned under former President Joe Biden.

Trump said he had discussed the proposed agreement with Canadian Prime Minister Mark Carney, describing it as beneficial to American farmers and the wider U.S. 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.

Carney said their conversation had built on recent discussions aimed at reaching an agreement that would strengthen economic ties while respecting Canada’s sovereignty.

Their exchange “builds on recent constructive discussions on the outlines of a mutually beneficial trade deal” that would create jobs, improve affordability, and fully respect Canada’s languages, culture, and sovereignty, Carney said in a social media post.

“Our teams will now be working in the coming weeks to deliver that outcome,” Carney wrote on X.

The two countries have imposed billions of dollars in tariffs on each other’s goods in recent months, straining trade relations and raising concerns among businesses on both sides of the border. Tariffs on Canadian products have also become an issue in northern U.S. states ahead of Tuesday’s midterm elections.

Trump said last week that a trade agreement with Canada was nearing completion, although Ottawa has previously reported limited progress in negotiations despite efforts to ease tariffs on steel and automobiles.

The U.S. president said the proposed agreement would include the Keystone XL pipeline, although details of how the project could be revived remain unclear.

“They’re ‌going ⁠to build the Keystone Pipeline,” Trump said on Sunday. “They’re going to pay for it. … We’re going to give them the route, and it’s largely been determined.”

Biden revoked a key permit for the privately funded pipeline in 2021, effectively ending the project after years of regulatory and political disputes.

A spokesperson for Dominic LeBlanc, Canada’s minister responsible for trade with the United States, had no further comment beyond Carney’s remarks.

Trump said in August that the pipeline “may be awoken from the grave.”

The proposed Keystone XL pipeline was designed to transport 830,000 barrels per day of crude oil from northern Alberta’s oil sands to the U.S. storage hub at Cushing, Oklahoma, before supplying refineries along the Gulf Coast.

Canada, the world’s fourth-largest oil exporter, sends more than 90% of its crude oil production to the United States, making cross-border pipeline infrastructure critical to its energy exports.

TC Energy, the Canadian company behind Keystone XL, suffered billions of dollars in losses after the project was cancelled. It subsequently spun off its crude oil pipelines business into South Bow, which has proposed an alternative project in partnership with U.S. company Bridger Pipeline.

The proposed Prairie Connector pipeline would transport 550,000 barrels per day of crude oil from Alberta to Wyoming, using some sections of Keystone XL pipeline infrastructure already installed in Canada before the earlier project was abandoned.

South Bow has said it expects to decide in 2027 whether to proceed with the Prairie Connector project.

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