Keystone Oil Pipeline Returns to US-Canada Trade Talks

CANADA · ANALYSIS

The Keystone XL pipeline, cancelled in 2021, is back in talks between Washington and Ottawa after Donald Trump said on 1 November that the two sides have a concept of a deal. For US readers it touches refinery crude supply, a 50% duty on Canadian goods and a long Senate fight over tariffs.

Canada is the largest foreign supplier of crude oil to the United States, and most of that oil moves by pipeline from Alberta. This analysis explains what Keystone XL was, what was said in the talks, what remains unconfirmed and what a deal could change, building on the USA & Canada Intelligence Brief of 9 November 2026.

How Keystone XL Began and Ended

Keystone XL was proposed in 2008 as an extension of the Keystone system, running about 1,947 km from Hardisty, Alberta, to Steele City, Nebraska, with a capacity of 830,000 barrels per day (bpd). EnergyNow describes the full design as carrying oil from northern Alberta toward Cushing, Oklahoma, and on to the Gulf Coast.

President Barack Obama rejected the cross-border permit in 2015, and Trump issued a new permit in 2019. President Joe Biden revoked that permit on 20 January 2021, according to Hashtag Investing.

TC Energy, the project’s owner, terminated Keystone XL in June 2021. The existing Keystone pipeline, a separate line, kept operating.

South Bow, an oil pipeline company, now carries the idea forward in a different form. Its Prairie Connector would reuse about 150 km of preserved Keystone XL pipe and add about 380 km of new pipe, according to Hashtag Investing.

What Was Said in the Talks

On 20 July 2026 Trump signed three proclamations under Section 338 of the Tariff Act of 1930, each adding a 50% duty on a different set of Canadian goods listed in its annex. The proclamations were widely reported as covering dairy, alcohol and motor vehicles, while the White House fact sheet describes goods “ranging from wine to hockey sticks to cement.”

According to The Auto Wire, the measure excludes goods already covered by Section 232 duties and cites Canada’s treatment of US vehicles. On 18 and 19 August Trump announced a tentative deal less than two hours before the duties were due, and paused them for three days.

He posted that the pipeline “may be awoken from the grave!” with an AI-generated image, CNBC reported on 19 August. Carney said substantial progress had been made but important work remained.

US Trade Representative Jamieson Greer said the administration was confident an agreement had been reached, while Trade Minister Dominic LeBlanc declined to confirm that steel and aluminium tariff cuts were on the table.

Canada ended the negotiations on 21 August, the three-day pause lapsed, and the 50% duties took effect on 22 August; proclamations of 8 September then added import bans and changed the product lists. Canada’s account, reported by the Associated Press and cited by The Auto Wire, is that it walked away after rejecting US demands that it said threatened sovereignty, French-language protections and the auto industry.

On 1 November Trump said Keystone XL is part of the concept and that farmers would pay no tariffs on Canadian products, while acknowledging that final details were not set. Carney wrote that “Our teams will now be working in the coming weeks to deliver that outcome,” according to EnergyNow.

On 3 November Carney said trade talks had grown more intense since his call with Trump, and that US negotiators were “asking less and they’re offering more, but we’re not quite there,” as BNN Bloomberg reported on 4 November.

The Numbers That Matter and the Effect on Crude Flows

The figures below come from different owners and periods, so they should not be added together. The two capacity numbers for the new line measure different things.

• 830,000 bpd: the design capacity of the original Keystone XL, proposed in 2008.
• 465,000 bpd: 20-year binding commitments from nine customers for the Prairie Connector, according to South Bow’s second-quarter 2026 results in August.
• Up to 550,000 bpd: the proposed capacity, per EnergyNow and PGJ Online.
• About 12%: the rise in Canada’s crude exports to the US that the 550,000 bpd line could bring (Reuters, via PGJ Online).
• 4.3m bpd: Canada’s crude exports in 2025, of which 90.1% went to the US, according to Hashtag Investing.
• About US$65m: South Bow’s guided pre-final-investment-decision costs for 2026, shared across the Prairie Connector and Liberty Bridge.
• About US$2.2bn (C$3bn): the cost estimate from ATB Capital Markets, as PGJ Online reports; South Bow has published none.
• About US$20bn: the value of the Canadian goods covered by the 50% duty, roughly 5% of US imports from Canada, according to law-firm and trade-press summaries.

Bridger Pipeline received a presidential permit on 30 April 2026 for a 36-inch border crossing in Phillips County, Montana. The permit does not replace other federal, state or local approvals, Hydrocarbon Processing reported.

The line would end at Guernsey, Wyoming. BOE Report notes that further links would be needed to reach Cushing, Patoka and the Gulf Coast, and a proposed Liberty Bridge link to Cushing would only proceed if sanctioned.

Heavy crude from Alberta already sells at a wide discount, and World Oil reported in February 2026 that the gap widened despite more export capacity. It cited competition from Venezuelan and Mexican heavy crude as one reason.

South Bow targets a final investment decision in mid-2027, and ATB Capital Markets analysts, as reported by PGJ Online, expect construction to take two to three years after that. On that estimate the first barrels would arrive around 2029 or later, so the line cannot touch gasoline prices this winter.

Who Is Who

The talks involve two governments, a pipeline company and a divided Canadian and American political debate. Each actor wants something different from the same deal.

• Donald Trump, US President: says Keystone XL and farm tariff relief are in the concept, and that Canada would pay for the pipeline.
• Mark Carney, Prime Minister of Canada: calls the talks constructive, but has not committed to financing or a route.
• Dominic LeBlanc, Canada’s minister responsible for Canada-US trade: leads Ottawa’s side of the negotiation.
• Tim Hodgson, Canada’s Energy and Natural Resources Minister: holds the pipeline portfolio.
• Jamieson Greer, US Trade Representative: said in August that the administration was confident of an agreement.
• South Bow, led by CEO Bevin Wirzba: the pipeline company developing the Prairie Connector.
• Bridger Pipeline: South Bow’s US partner, holder of the 30 April 2026 border permit.
• Tim Kaine, US Senator: led the 2025 Senate votes to end the Canada tariff emergency.

Wirzba said on 28 May that South Bow will not proceed without evidence that the US permit is durable, according to PGJ Online. That condition matters because a future administration could revoke a presidential permit, as Biden did in 2021.

Trump wants a visible win for farmers and for the energy sector. Carney wants relief from the 50% duty without conceding the issues Canada says touch sovereignty, French-language protections and autos.

Business Stakes, the United States and Latin America

US Refiners and Congress

Canada supplied 63.4% of US crude imports in 2025, so US refiners already depend heavily on Alberta barrels. A new line to Wyoming would add supply from around 2029 or later, but only if connecting pipelines are built beyond Guernsey.

The Senate voted twice in 2025 to end the Canada tariff emergency, by 51 to 48 in April and 50 to 46 in October, according to Roll Call and CTV. The House did not act, and Trump threatened a veto.

We found no 2026 Senate repeal vote on the current duties. They rest on Section 338 rather than the emergency declarations those resolutions targeted, so lawyers would need to confirm whether the same route is open.

Latin American Exporters

Bloomberg reporting from February 2026, as summarised in search results, says Venezuelan heavy crude volumes on the US Gulf Coast have risen since Nicolás Maduro’s removal in early January. S&P Global says Venezuela‘s Merey 16 grade has pressured the Canadian heavy-crude price, though we did not verify the primary pieces.

A Reuters report carried by BOE Report in August 2024 blamed competition from Mexican heavy crude on the US Gulf Coast as one cause of weak Canadian heavy crude prices. Separately, falling Mexican output is said to leave room for Canadian barrels.

We found nothing on Brazil or Colombia in this context. As our own inference, more Canadian heavy crude on the Gulf Coast from 2029 would compete with Latin American grades for the same refinery slots, and no one has quantified that effect.

Scenarios

These are scenarios, not forecasts. They show what could steady the talks and what could unsettle them.

In a stabilising case, both governments sign a text that lifts the 50% duty and gives South Bow a clear, lasting permit. South Bow could then take its final investment decision in mid-2027 and move toward construction.

In a stalling case, the concept stays a concept, as it did after the August announcement. The duties would remain, and the Prairie Connector would continue on its own track, since its permit does not depend on a trade deal.

In a tipping case, the pipeline becomes a financing dispute if Trump insists that Canada pays and Carney does not agree. A 2029 change of administration could also test the permit, which PGJ Online names as a risk point.

What It Means for You

If you drive or heat a home in the United States, nothing in this deal can change your bills this winter. Analysts’ construction estimates point to the first new barrels arriving around 2029 or later.

If you invest in energy, the signals to track are South Bow’s mid-2027 decision and the durability of the permit. Refiners and pipeline owners are more exposed to this story than ordinary fuel buyers.

If you work in agriculture or manufacturing, the 50% duty on Canadian goods, which law-firm and trade-press summaries value at about US$20bn, is the nearer risk. Trump said farmers would pay no tariffs on Canadian products, but the July proclamations were widely reported as covering dairy.

What Is Not Known

No one has confirmed that a deal exists, what its terms are or whether Keystone XL is in a final text. Trump has said Canada would pay for the pipeline, and Carney has not committed to financing.

• Which route the pipeline would take; Trump called it largely determined.
• Whether farm-goods relief is included.
• Whether steel and auto relief is included.
• When Canada’s chief negotiator returns to Washington.
• The final capacity: the proposed line is described as up to 550,000 bpd.

We did not read the proclamations, the Federal Register notices or Canada’s own statement on the talks. We also did not check the results of the 3 November US midterm elections.

What to Watch

• The coming weeks: Carney’s stated window for his teams to deliver an outcome, with no firm date given.
• Any revised tariff annex: the last one took effect on 30 October and changed the product list.
• Mid-2027: South Bow’s target for a final investment decision on the Prairie Connector.
• 2029: the year PGJ Online names as a risk point for the permit.

We could not confirm the date of the joint review of the Canada-US-Mexico trade agreement, so no review date is listed. Readers should check the next Rio Times brief for updates.

Frequently Asked Questions

What is the Keystone XL pipeline?

Keystone XL was a proposed oil pipeline with a capacity of 830,000 barrels per day from Hardisty, Alberta, to Steele City, Nebraska. Biden revoked its permit on 20 January 2021, and TC Energy terminated it in June 2021.

Why is Keystone XL back in US and Canada tariff talks?

On 1 November 2026 Trump said the concept of a deal includes Keystone XL and no tariffs on Canadian farm products. Nothing has been signed, and Carney has not committed to financing or a route.

Is Keystone XL being rebuilt?

Not in its original form. South Bow and Bridger Pipeline are developing the Prairie Connector, which reuses about 150 km of preserved Keystone XL pipe, according to Hashtag Investing.

Will a deal lower US gasoline prices?

No pipeline barrel can reach US refineries this winter. South Bow targets a final investment decision in mid-2027, and ATB Capital Markets analysts expect construction to take two to three years after that.

How much more Canadian oil could reach the US?

PGJ Online, citing Reuters, says the 550,000 bpd line could increase Canada’s crude exports to the US by about 12%. South Bow has 20-year binding commitments for 465,000 barrels per day from nine customers, according to its second-quarter 2026 reporting.

What does it mean for Latin American oil exporters?

Canadian producers cite Venezuelan and Mexican heavy crude as competition that has weighed on their prices. More Canadian heavy crude on the Gulf Coast from 2029 could compete with those grades, but no one has quantified the effect.