Late last month, in his address to a joint session of Congress, President Donald Trump boldly proclaimed: "We have cleared the way for the construction of the Keystone and Dakota Access Pipelines -- thereby creating tens of thousands of jobs -- and I've issued a new directive that new American pipelines be made with American steel."

Keystone Pipeline operator TransCanada (NYSE:TRP), and Energy Transfer Partners (NYSE:ETP) and Sunoco Logistics (NYSE:SXL) at Dakota Access were now on notice. As Trump had already stated earlier in the week in a speech at the Conservative Political Action Conference: "If they want a pipeline in the United States, they're going to use pipe that's made in the United States." The steel needed to build these pipelines "comes from the United States, or we're not building one."

Except that it isn't...but we still are.

Long oil pipeline stretching through countryside.

Steel investors may have miles to go before they sleep easy on Trump's "U.S. steel" pipeline promise. Image source: Getty Images.

It depends on what the meaning of "new" is

In no uncertain terms, President Trump literally laid down the law for builders of the Dakota Access and Keystone Pipelines, signing an executive order codifying his demand that U.S. steel be used to build them both. But already, the White House appears to be backtracking.

Last week, White House Deputy Press Secretary Sarah Sanders clarified that what Trump really meant was that any new pipelines announced in the future (or repairs to existing pipelines) would have to utilize U.S. steel -- but pipelines already in the process of being built, such as Keystone, would not be subject to the requirement.

Can he do that?

Well, for one thing, if you read the fine print of the president's executive orders, it appears he left himself an "out" from the get-go. While Trump described the orders as requiring purchases of U.S. steel, period, the actual language of the orders requires these purchases be made only "to the maximum extent possible and to the extent permitted by law."

Some critics have already raised objections to the legality of telling private companies where to buy their steel. And as Sanders further explained, Keystone Pipeline "is already currently under construction, the steel is already literally sitting there" -- already bought from companies based in Russia, India, and Italy, according to Reuters. It would be hard to go back and make TransCanada buy identical new pipe from American producers like U.S. Steel (NYSE:X) or AK Steel (NYSE:AKS), because then TransCanada would have a big load of pipe that it had already bought and would have to find another use for.

Adding to the complication, steel industry experts have pointed out that the pipe needed to build the Keystone Pipeline is of a thickness and diameter that may not currently be producible by U.S. companies like U.S. Steel or AK Steel -- and while they could perhaps retool to meet the requirements, that would take time and delay construction.

What it means for investors

All of this is good news for TransCanada, and for Energy Transfer Partners and Sunoco Logistics, as well. They get a free pass from President Trump to build their pipelines, and contrary to popular impression, they need not buy American steel after all.

On the other hand, this comes as disappointing news for investors who bought stock in U.S. Steel -- whose shares shot up as much as 20% after Trump's election in November -- and AK Steel -- whose shares had nearly doubled at one point, and are still up 33% today.

Beaucoup profits from building the Keystone Pipeline, and Dakota Access, it seems, will not be forthcoming. And with both companies still operating firmly in the red, that's not going to be very good news for their stock prices.

Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.