Prime Minister Mark Carney is exploring a bold strategy to break the deadlock on U.S. tariffs: linking Canada’s energy cooperation to support for the steel and aluminum industries — and reviving the once-cancelled Keystone XL pipeline project.
According to a senior government source briefed on the talks, Carney raised the possibility of restarting Keystone XL during his meeting with U.S. President Donald Trump at the White House on Tuesday. The source said Trump was “very receptive” to the idea, and both leaders instructed their teams to begin follow-up discussions in the coming days. CBC News first reported on Carney’s proposal.
The two leaders reportedly spoke about forging sector-to-sector agreements, recognizing that progress in one area — such as energy — could unlock concessions in others, including tariffs on steel and aluminum.
Trump has previously expressed interest in bringing Keystone XL back to life. In February, he posted on social media that he wanted the project revived. The pipeline, designed to carry Alberta crude to U.S. Gulf Coast refineries, was cancelled by the Obama administration, resurrected during Trump’s first presidency, and then scrapped again by President Joe Biden.
South Bow Corp., which took over the Keystone system after spinning off from TC Energy Corp. last year, has said it has “moved on” from the XL expansion. However, the company signalled openness to new discussions, telling The Canadian Press it supports “efforts to find solutions that increase the transportation of Canadian crude oil.”
The proposal has already drawn praise from Alberta Premier Danielle Smith, who is currently touring Quebec and Ontario to promote a new West Coast pipeline project. Speaking at a Toronto conference, Smith called Carney’s move “a positive step.”
“They’re talking about a steel, aluminum and energy construct for a deal to start easing some of the pain on the tariffs. So I think that that’s a positive,” she said. “What I told Prime Minister Carney when he came in is, stop threatening to sell the U.S. less energy, and let’s promise to sell them more. Because I think that’s the pathway to a solution.”
While it’s unclear how feasible a Keystone XL revival would be in practice, the discussion marks a significant shift in Canada’s approach to trade negotiations with the Trump administration — one that ties energy exports more directly to industrial policy and tariff relief.