Canada Pushes Keystone XL Revival, Links Energy to Tariff Relief in High-Stakes Talks with Trump
TORONTO — In a significant diplomatic maneuver, Canadian Prime Minister Mark Carney engaged U.S. President Donald Trump on the contentious prospect of resurrecting the Keystone XL pipeline project during a recent White House visit. The discussion, confirmed by a Canadian government official on Wednesday, signals Canada’s renewed push for energy cooperation intertwined with efforts to ease punitive U.S. tariffs on Canadian goods.
The Tumultuous History of Keystone XL
The proposed Keystone XL pipeline, envisioned to stretch approximately 1,900 miles (3,000 kilometers), was designed to transport up to 830,000 barrels—or roughly 35 million gallons—of crude oil daily from the vast oil sands of western Canada to Steele City, Nebraska. From there, it would connect with existing pipeline networks feeding oil refineries along the U.S. Gulf Coast. The project has been a flashpoint of environmental and economic debate for over a decade.
Its turbulent history saw initial delays under the Obama administration, a revival during Trump’s first term, and a definitive halt in 2021. On his first day in office, President Joe Biden revoked its presidential permit, citing longstanding environmental concerns that the extraction and burning of oil sands crude would exacerbate climate change and be difficult to reverse. Following this setback, the Canadian company behind the project officially pulled the plug.
Energy for Economic Leverage: A Strategic Play
During Wednesday’s White House meeting, President Trump reportedly showed receptiveness to the idea. Prime Minister Carney strategically framed the pipeline’s potential revival within a broader economic context, directly linking enhanced energy cooperation to Canada’s steel and aluminum sectors. These vital Canadian industries have been subjected to significant U.S. tariffs, including a 50% tariff on aluminum exports, creating substantial economic pressure. A government official, speaking anonymously due to the sensitive nature of the discussions, indicated that Carney is seeking to leverage Canada’s energy resources to negotiate a reduction in these duties.
Pressure from Alberta and a “Brilliant Judo Move”
The initiative comes as Prime Minister Carney faces considerable pressure from oil-rich provinces like Alberta, which views new pipeline infrastructure as crucial for market access and economic prosperity. Former Alberta Premier Jason Kenney echoed this sentiment, calling a new pipeline to the U.S. Gulf Coast the “cheapest, fastest and least complicated route” for Canadian oil. Kenney further suggested that strategically pursuing the project with a Trump administration could be a “brilliant judo move” to foster common ground and remind the U.S. of the benefits derived from its “privileged relationship to Canada” and access to its resources, thereby providing leverage against tariffs.
Beyond Oil: Canada’s Critical Role in U.S. Supply Chains
Beyond oil, Carney underscored Canada’s critical role in the U.S. supply chain, particularly for aluminum. He highlighted that Canada supplies 60% of the aluminum needed by the United States. He contended that for the U.S. to produce that much aluminum domestically, it would require energy equivalent to “10 Hoover Dams,” questioning the wisdom of such an undertaking given the burgeoning “AI revolution” and the imperative to keep domestic electricity costs low.
A Shifting Bilateral Landscape: “America First”
In a candid reflection on the bilateral relationship, Carney acknowledged a fundamental shift, stating in a live video call with Toronto business leaders, “Our relationship will never again be what it was.” He added, “We understand America first,” signaling Canada’s recognition of a new era in U.S.-Canada diplomacy where national interests are explicitly prioritized by its southern neighbor.
South Bow Corp.’s Stance
South Bow Corp., the operator of the existing Keystone pipeline system, has stated it is not privy to the governmental discussions but supports efforts to increase Canadian crude oil transportation and will continue to explore opportunities leveraging its existing infrastructure.
