Trump hits pause on Canada tariffs threat, and hints at revival of Keystone XL oil pipeline project

US president delays 50% tariffs by three days, and says contentious oil project ‘may be awoken from the grave’

Canada has temporarily avoided a bruising 50% US tariff, reaching a Tuesday evening agreement with Trump officials, hours before a hike that would have affected $20bn worth of goods was set to take effect.

Trump posted late Tuesday on social media that he had paused the tariffs for three days “based on the fact that Canada and the USA, subject to the finalization of documents, have a DEAL!”

The duties would have affected a range of Canadian exports including wine and hockey sticks.

In the same social media post, Trump said the controversial Keystone XL Pipeline project “may be awoken from the grave” without giving further details or suggesting whether it was linked to the tariffs deal.

Keystone XL, which was proposed in 2008 to bring oil from Canada’s western tar sands to US refiners, was halted in 2021 by owner TC Energy after Joe Biden revoked a key permit needed for a US stretch of the 1,200-mile project. The project became a flashpoint in US-Canada relations, amid opposition from US landowners, Native American tribes and environmentalists.

North American oil pipelines, including Dakota Access and Enbridge Line 3, have faced steady opposition from environmental groups, amid concerns about spills.

Tuesday’s 11th-hour deal comes amid a contentious past year for the two countries, with the long-standing alliance strained by tit-for-tat tariffs and online broadsides in which Trump has mused about turning Canada into an American state.

In February 2025, the White House hit Canada with a 25% tariff, citing what it regarded as inadequate progress in curbing cross-border illegal immigration and drug trafficking.

In retaliation, Canada announced a reciprocal levy, calling the US’s actions “unwarranted and unreasonable .The country’s leadership also countered the Trump administration’s claims, maintaining that it had launched a robust border protection plan and that less than 1% of fentanyl and illegal crossings came from Canada.

Tensions flared again in July 2026 when the White House announced the 50% tariffs, saying that it sought to hold Canada accountable for discrimination against American cars, alcohol and dairy products.

In recent days, top officials from the two countries were engaged in “intense and delicate” talks, Mark Carney told reporters on Monday. The Canadian prime minister added that it was “not the time to talk about negotiations in public”.

Historically, Canada and the US have been strong trading partners. In 2024, trade between the countries estimated roughly $909bn, per the office of the US trade representative.

The latest proposed American levy has stoked concern about financial devastation and untenable export costs among Canadian business owners, the CBC reported.