The United States has temporarily delayed a threatened 50% tariff on Canadian goods by three days following a last-minute agreement, while President Donald Trump suggested a potential revival of the Keystone XL oil pipeline project.
The agreement, reached on Tuesday evening between Canadian and American officials, came just hours before the duties were set to take effect. The 50% tariffs would have targeted approximately $20 billion worth of Canadian exports, affecting products ranging from wine to hockey sticks.
Alongside the tariff delay, Trump signaled that the long-dormant Keystone XL project "may be awoken from the grave." Originally proposed in 2008 to transport oil from Canada's western tar sands to refineries in the US, the 1,200-mile (1,930km) pipeline was halted in 2021. Its owner, TC Energy, shut down the project after President Joe Biden revoked a critical permit required for its US section. The pipeline has remained a major point of friction in bilateral relations, drawing fierce opposition from US landowners, Native American tribes, and environmentalists.
Environmental opposition has also targeted other North American oil pipelines, such as the Dakota Access and Enbridge Line 3, primarily due to concerns over potential spills.
Trade tensions between the neighboring nations have escalated over the past year. In February 2025, the White House imposed a 25% tariff on Canada, pointing to what it described as insufficient efforts to stop illegal immigration and drug trafficking across the border. Canada responded with a reciprocal levy, labeling the US measures "unwarranted and unreasonable." Canadian leaders defended their border security, asserting that less than 1% of illegal crossings and fentanyl originated from Canada.
The dispute intensified in July 2026 when the Trump administration announced the 50% tariffs, accusing Canada of discriminating against US-made automobiles, alcohol, and dairy products. In the lead-up to the latest agreement, top officials from both nations held what Carney described on Monday as "intense and delicate" negotiations.
Historically, the US and Canada maintain a massive trading relationship, with bilateral trade estimated at approximately $909 billion in 2024, according to the Office of the US Trade Representative.
