On Tuesday, former President Donald Trump hinted at the potential revival of the long-debated Keystone XL pipeline, suggesting it might be part of a preliminary trade deal with Canada, which has led to the postponement of a proposed 50% tariff on Canadian goods.
Hours before the tariffs were set to take effect, Trump announced a three-day suspension and mentioned that the U.S. and Canada had come to a preliminary agreement, pending the final paperwork. While the specifics of the deal haven’t been disclosed, the U.S. Trade Representative’s office indicated it involves broader market access for American products and commitments to economic security.
The tariffs, originally aimed at about $20 billion worth of Canadian products—ranging from hockey gear to dairy and alcohol—were slated to come into effect on Wednesday but were delayed until August 21 to allow negotiators time to finalize the agreement. Reuters reported that these tariffs would impact Canadian goods by approximately $20 billion.
While the focus of this tariff issue is on consumer goods, Trump’s remarks on Keystone XL could resonate more widely, as they may lead to a significant increase in Canadian crude oil entering U.S. refineries.
The Keystone XL project was initially abandoned due to the policies of President Joe Biden, who revoked its presidential approval in 2021. However, a new pipeline system, known as the Prairie Connector proposed by Southbow, is in the works. This project aims to extend from Hardisty, Alberta, to the U.S. border, linking to the Bridger Pipeline’s facilities in the States. It plans to incorporate about 380 kilometers of new pipeline and utilize around 150 kilometers of previously installed infrastructure.
In April, Trump issued an executive order that reinforced the U.S. segment of the project, allowing the Bridger Pipeline the authority to construct and manage facilities at the Montana-Canada border, facilitating the transport of various petroleum products.
Southbow revealed in May that the Prairie Connector has secured a long-term agreement for transportation services from Hardisty to U.S. distribution points, enabling continued progress on the project, with a final investment decision targeted for mid-2027. The aim is to connect Alberta crude to a U.S. point of delivery.
This proposed system is designed to initially transport about 550,000 barrels of crude oil daily, with possibilities for future growth. The Bridger segment is set to stretch approximately 1,047 miles from the Canadian border in Montana to a terminal near Guernsey, Wyoming.
Increasing pipeline capacity could help ensure more reliable access for Canadian crude to U.S. refiners, potentially lowering fuel prices for gasoline, diesel, and jet fuel by providing easier access to large, close oil sources. However, fluctuations in fuel costs can be influenced by factors like global oil prices, refinery capacity, transportation expenses, and taxes, so a larger supply doesn’t automatically guarantee cheaper prices at the pumps. It’s also worth noting that Canada remains the largest supplier of crude oil to the U.S., making additional pipeline capacity quite significant for the U.S. refining sector.
Nonetheless, the project isn’t without its challenges. Earlier in July, Montana regulators withdrew a waiver that previously allowed Bridger Pipeline to bypass certain environmental and financial disclosures, requiring them to provide further information before the state’s permit process could continue. This was reported following a legal challenge.
Southbow still has a lot of groundwork to cover—being required to secure further permits, ensure the permanence of those permits, wrap up project costs, communicate with communities, engage with landowners and Indigenous groups, and secure funding—before they can make that final investment decision, which they are aiming for by mid-2027.
