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

Canada has temporarily avoided a bruising 50% US tariff, reaching a Tuesday-evening agreement with Trump administration officials hours before a hike that would have affected $20bn worth of goods was set to take effect.Donald Trump posted late on 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!”After Trump’s announcement, Canadian prime minister Mark Carney said “substantial progress” had been made towards a trade deal but more work was needed.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 (1,930km) project. It 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 longstanding alliance strained by tit-for-tat tariffs and online broadsides in which Trump has mused about turning Canada into a US 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 US-produced cars, alcohol and dairy products.In recent days, top officials from the two countries were engaged in “intense and delicate” talks, Carney told reporters on Monday.Historically, Canada and the US have been strong trading partners. In 2024, trade between the countries was estimated to be roughly $909bn, according to the office of the US trade representative.The latest proposed US levy has stoked concern about financial devastation and untenable export costs among Canadian business owners, the CBC reported.Certain goods formerly protected from import taxes under the Trump-negotiated United States-Mexico-Canada (USMCA) deal were not shielded from the latest round of tariffs.