In a recent address, former President Donald Trump reignited discussions surrounding the Panama Canal by asserting that the United States would reclaim control of the waterway, which was handed over to Panama in 1999. Trump criticized China's influence over the canal and the fees charged to American ships, claiming, 'We didn’t give it to China, we gave it to Panama and we’re taking it back' [5316f2c1]. This statement has raised significant concerns regarding U.S.-Panama relations and the historical context of the canal's management.
Panama's President José Raúl Mulino responded to Trump's comments with skepticism, urging him to 'be serious.' Mulino emphasized that the canal is operated by Panamanians and dismissed Trump's claims as false, reiterating that control was transferred to Panama in 1999 [1981c300]. The canal is vital for Panama's economy, contributing approximately 4% to its GDP and serving as a crucial route for global trade [96189c57].
In a related development, Panama is now considering canceling its contract with Hutchison Ports PPC, a subsidiary of CK Hutchison Holdings Ltd., which operates two ports near the Panama Canal. This potential cancellation is influenced by U.S. pressure regarding China's control over key infrastructure [35dda56d]. U.S. Secretary of State Marco Rubio visited Panama to discuss concerns about China's influence, underscoring the geopolitical tensions surrounding the canal [35dda56d]. Hutchison Ports holds a concession for the ports at Balboa and Cristobal, originally signed in 1997 and extended in 2021 until 2047. Legal challenges have been filed against Hutchison's operations, claiming violations of Panama's constitution [35dda56d].
On January 28, 2025, the Senate Commerce, Science, and Transportation Committee met to address U.S.-China tensions regarding the Panama Canal, a key issue raised by Trump since his November reelection. Senator Ted Cruz expressed concerns over Chinese control of the canal, citing potential violations of the 1977 U.S.-Panama agreement and national security risks. Cruz highlighted Chinese companies constructing a bridge and controlling ports near the canal, which could threaten U.S. shipping [1d11ad5b]. Federal Maritime Commission (FMC) Chairman Daniel Maffei acknowledged the canal's vulnerability, emphasizing the need for vigilance [1d11ad5b].
Law professor Eugene Kontorovich warned that Chinese activities may disguise military intentions, referencing past military actions disguised as civilian projects [1d11ad5b]. Democratic senators, including Senator Maria Cantwell, showed concern over Chinese influence but were less critical than their Republican counterparts. Senator Tim Sheehy emphasized the importance of securing international waterways for the U.S. economy, while Senator Marsha Blackburn called for conditioning U.S. investments in Panama to limit Chinese involvement [1d11ad5b].
Sola testified that over 40% of U.S. container traffic, valued at approximately $270 billion annually, transits the Canal [ec7feb35]. He warned that the canal's reduced capacity and the Suez Canal's closure due to Houthi attacks have led to increased shipping costs and delays, with projections indicating a potential 50% capacity drop by 2050, threatening global trade [ec7feb35].
Andrew Thomas, an Associate Professor at the University of Akron, highlighted the canal's significance for transporting American liquid natural gas to markets in China, Japan, India, and Korea. He clarified that while Trump suggested that China operates the canal, it is actually managed by Panama, which has successfully run it since taking control in 2000 [5e45fe1a]. Thomas noted that China operates certain ports under a contract renewed in 2023 for another 25 years, but American companies have shown little interest in bidding for these contracts [5e45fe1a].
The Panama Canal has faced various challenges, including dependency on global trade patterns and the availability of fresh water, which are critical for its operations [5e45fe1a]. Trump's remarks have invoked historical notions of 'Manifest Destiny,' suggesting a justification for U.S. expansionist policies, which remains a sensitive topic in Panama [1981c300].
As the canal continues to play a pivotal role in international shipping—accounting for a significant portion of global trade—its management and the geopolitical dynamics surrounding it will be closely watched. The U.S. remains the largest user of the canal, and any tensions over its management could have far-reaching implications for both countries and global trade [39da8576]. Joseph Kremek reported a 15% increase in containerized trade in 2024, supporting 6.4 million U.S. jobs, underscoring the canal's importance for U.S. trade, with 75% of traffic linked to U.S. ports [8cdcdbd7].
In light of these tensions, experts caution against any military intervention in Panama, recalling the U.S. military's past involvement during Operation Just Cause in 1989 to oust General Manuel Noriega. Such actions, justified at the time due to Noriega's drug dealings, could lead to increased animosity towards the U.S. in Latin America and disrupt vital shipping routes, ultimately raising costs for importers and exporters [62618c2e]. The Panama Canal Authority (ACP) has also undertaken significant expansion projects, emphasizing the need for climate change mitigation strategies during droughts, further complicating the geopolitical landscape [62618c2e].