President-elect Donald Trump has issued strong warnings about the future of the Panama Canal, stating he may demand its return to U.S. control if Panama does not alleviate the supposedly excessive fees charged to American vessels. Speaking on Truth Social, Trump criticized the charges as "exorbitant" and labeled them as part of what he called "a complete rip-off of our Country." His statements reflect his concern about the potential influence of China over the strategically important waterway.
The remarks come after years of rising tensions tied to the canal, which has been under Panamanian control since 1999, following agreements established under the Torrijos-Carter Treaties signed by then-President Jimmy Carter. During his lengthy post, Trump alluded to the U.S.'s historical role in the canal's construction and management. He suggested, “Our Navy and Commerce have been treated in a very unfair and injudicious way… This complete ‘rip-off’ of our Country will immediately stop.”
Since its completion, the Panama Canal has played a pivotal role in global maritime trade by providing the fastest route between the Atlantic and Pacific Oceans. Today, it facilitates around 14,000 transits annually and is responsible for about 2.5% of overall global maritime trade. With major reliance on the canal from the U.S., which serves as the primary user with nearly three-quarters of all cargo traveling through it, Trump's assertions carry significant weight.
Historically, the U.S. seized the opportunity to construct the canal after supporting Panama's independence from Colombia back in 1903. This underlined U.S. interests dominating the region for decades. Trump reflected on this history when he lamented, “When President Jimmy Carter foolishly gave it away, for One Dollar… it was solely for Panama to manage, not China, or anyone else.” This characterization of the transfer as “foolish” points to Trump's larger theme of skepticism surrounding U.S. foreign policy decisions during the late 20th century.
Importantly, Trump's focus on potential Chinese involvement with the canal positioned his commentary within broader geopolitical concerns. Chinese investments have been rising steadily across Latin America, with Panama first signing onto China’s Belt and Road Initiative (BRI) back in 2018. This deal intensified discussions about China’s influence, particularly concerning infrastructure contracts and operations centered around the canal.
Despite Trump's threats, the legalities surrounding the Panama Canal's control are complex. The U.S. relinquished its rights to the canal completely by 1999 under international agreements, meaning Trump has little recourse under international law to reclaim it unilaterally. Analysts previously warned about the consequences of China’s increased presence, including the potential for Panama to be caught choosing sides between the U.S. and China.
Various Panamanian officials quickly responded to Trump's bold claims online, asserting their government's intent to independently manage the waterway without external influences or threats. National Assembly member Manuel Alberto Samaniego Rodriguez expressed his resolve on social media, warning, “This young Panamanian independent deputy will defend his country with his life if necessary,” underscoring the deep-seated emotion tied to national sovereignty.
Despite the tensions, the canal remains economically significant for both nations. The canal charges fees based on vessel size and purpose, which have spurred debate over fairness and equality. Trump pointed out the exorbitant fees citing instances where shipping companies, confronted with increased costs due to drought conditions weakening the canal’s functionality, have been forced to pay millions to navigate the passage amid congestion.
Cartels and other trade businesses look for efficiency and routes based on the cost-effectiveness of transportation. The U.S. economy significantly relies on this route for importing goods from Asia, particularly liquefied natural gas and commercial goods, which makes the canal's stability and cost-effectiveness pivotal for American interests.
Some experts assert U.S. businesses would suffer considerably if Trump's threats cause diplomatic friction enough to disrupt trade access to the canal. Reducing transit fees, as he suggested, could decrease prices for consumers and open up new markets.
Overall, Trump's rhetoric serves as both a reflection of his administration's confrontational foreign policy approach and highlights the Bengal tiger avoiding the wave at the cost of civil defiance. While stirring up support from his base, it significantly raises tensions with longtime allies and foreign governments as overlapping stakes produce potential volatility across Central America.
The global shipping community will undoubtedly watch as these developments evolve. The canal's impact on international trade will remain under scrutiny, particularly as negotiations progress and border tensions emerge amid strengthening ties between Panama and China.
With construction costs of over $300 million over 100 years ago and the distance between trade routes being key, the importance of the canal cannot be overstated. Trump's posturing, combined with the historical tension surrounding control and management of the canal, sets the stage for substantial geopolitical dialogue.
Each statement and action taken will greatly impact not just U.S. interests but also the wider dynamics within Latin America as interests clash and converge. Unfolding events deserve careful attention as they could redefine power and influence on the global stage.
