Trump says US-Canada trade deal is close as Keystone XL pipeline returns to talks

United States President Donald Trump has said Washington and Ottawa are approaching a new trade agreement after talks with Canadian Prime Minister Mark Carney, raising the prospect of tariff relief and a revival of the long-cancelled Keystone XL oil pipeline. Speaking in Iowa on November 1, 2026, Trump said the governments had reached the outline of a potentially beneficial agreement, particularly for American farmers, while Carney described their latest conversation as constructive. Canadian negotiators are expected to continue discussions with their American counterparts over the coming weeks, but neither government has announced a completed agreement or published binding commercial terms. The diplomatic shift comes just before the November 3 United States midterm elections, when trade tensions and living costs are major political issues.

The new discussions follow a period of deteriorating bilateral relations in which tariffs affected Canadian industrial exports and retaliatory measures increased costs for businesses. Canada previously withdrew from negotiations after rejecting American demands that Ottawa considered incompatible with its sovereignty and other national priorities. Trump has now suggested that the two sides could also reach an understanding involving Keystone XL, a pipeline project whose original cross-border permit was revoked in 2021. His comments have reopened questions about the feasibility of a project that would require commercial investment, regulatory approvals and agreement on construction arrangements.

What did Donald Trump and Mark Carney agree during their latest trade talks?

Carney said on November 1 that his conversation with Trump had built on discussions about a mutually beneficial trade agreement. He indicated that the negotiations would focus on creating employment, improving affordability and protecting Canada’s language, culture and sovereignty. The Prime Minister said officials from both countries would continue working towards a negotiated outcome in the coming weeks. His statement signalled progress but did not identify a final tariff schedule, signed treaty or implementation date.

Trump separately told reporters in Iowa that the governments had developed a concept for a trade deal. He argued that the arrangement could benefit American agriculture and improve the broader trading relationship. The President also said an agreement was close, although he did not identify a definitive timetable for signing it. The difference between a preliminary political understanding and an enforceable agreement is particularly important given the countries’ recent history of failed negotiations.

The renewed optimism follows an earlier breakdown in talks over issues including Canadian industrial protections and Washington’s demands concerning bilateral trade. Carney had previously indicated that Canada was unwilling to accept arrangements it believed would compromise essential national interests. A successful agreement would therefore require concessions compatible with both governments’ negotiating positions. Those terms have not yet been made public.

Why has Keystone XL returned to the US-Canada trade negotiations?

Trump said the potential agreement could include renewed construction of the Keystone XL oil pipeline, which was intended to transport Canadian crude oil to the United States. The original project became a major political and environmental controversy before former President Joe Biden revoked a presidential permit in 2021. Its cancellation disrupted plans for additional cross-border transportation capacity and became a recurring issue in energy-security debates. Trump has long supported pipeline development as part of his broader energy policy.

The President suggested that Canada would pay for the revived project and that the route had largely been determined. However, Carney did not publicly confirm those specific terms in his statement about the trade discussions. No financing agreement, final development plan or new cross-border permit has been announced. Trump’s description should consequently be treated as a proposal under discussion rather than evidence that construction has been authorised.

The commercial landscape has also changed since the original Keystone XL proposal. TC Energy Corporation, the former developer, subsequently separated its liquids-pipeline business into South Bow Corporation. South Bow is examining a different project known as Prairie Connector, which could use some infrastructure associated with the earlier pipeline development. The company has indicated that a decision on whether to proceed with that proposal is expected in 2027, making it distinct from an approved Keystone XL restart.

Which US and Canadian industries could benefit from a new trade agreement?

Automotive manufacturing, steel, aluminium, agriculture and energy are among the sectors with substantial exposure to cross-border trade policy. The United States and Canada maintain deeply integrated production networks, particularly in vehicle manufacturing, where components may cross the border multiple times during production. Tariffs can therefore affect manufacturers and suppliers on both sides rather than imposing costs exclusively on foreign producers. Reduced trade barriers could improve commercial predictability if they are implemented through clear and durable rules.

Agriculture is another prominent issue because Trump has emphasised the potential benefits for American farmers. Producers and agricultural suppliers have faced higher costs associated with trade restrictions, fuel prices and international economic disruption. A bilateral agreement could help address specific market-access problems, depending on which goods and tariffs are covered. However, the President has not published the agricultural concessions or commitments associated with his proposal.

Canadian energy exporters would also be interested in any agreement affecting crude oil transportation and associated infrastructure. Canada sends the overwhelming majority of its crude oil exports to the United States, making pipeline access strategically important. Additional transportation capacity could influence the range of destinations and customers available to Canadian producers. Nevertheless, the commercial value of a new pipeline would depend on construction costs, tariffs, shipping demand and market conditions.

Why are US tariffs on Canadian steel and automobiles politically sensitive?

The trade dispute has affected industries employing substantial numbers of workers in both countries. Canadian steelmakers, aluminium producers and vehicle manufacturers have faced uncertainty over American tariffs and the conditions for accessing their largest export market. American companies dependent on Canadian materials and parts may also experience higher input costs. The consequences vary by product and company, meaning the financial effects cannot be reduced to one national tariff figure.

The dispute has acquired particular political importance in American states with strong manufacturing and agricultural connections to Canada. Michigan and Maine are among the states where trade tensions have become part of the wider midterm election debate. Candidates have faced questions about the economic effects of tariffs and their positions on future trade policy. The renewed discussions may provide a positive political signal, but an unsigned proposal does not immediately remove existing trade barriers.

Canadian opposition leader Pierre Poilievre has urged Carney to secure a practical agreement rather than rely on diplomatic assurances. His criticism reflects concerns about the economic costs of prolonged negotiations. Carney’s government, meanwhile, has sought to demonstrate that it can defend Canadian interests while rebuilding commercial cooperation. The outcome will depend on the terms ultimately accepted by both governments.

What happens next for the proposed US-Canada trade deal and Keystone XL?

Negotiators are expected to continue discussing tariffs, market access and potentially energy infrastructure over the coming weeks. Any agreement would need to identify the products covered, the obligations undertaken by each government and the procedure for implementation. A pipeline revival would require additional commercial and regulatory decisions beyond a political declaration. The two processes should not be treated as interchangeable.

The latest statements represent a meaningful improvement in diplomatic tone after months of confrontation. However, previous disagreements over sovereignty and industrial policy remain relevant to what the two governments can realistically accept. Trump’s Keystone XL proposal also raises unanswered questions about ownership, financing and the role of existing pipeline infrastructure. The next important development will be the publication of substantive terms rather than another expression of confidence that a deal is close.