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President Donald Trump has repeatedly expressed his desire to regain U.S. ownership of the Panama Canal, which the United States previously controlled until a treaty transferred full ownership to Panama in 1999. Trump\u2019s bluntly stated desire, alongside comments he has made about\u00a0acquiring Greenland, would violate the international\u00a0principle of sovereignty\u00a0and decades of U.S. foreign policy norms if translated into action. The canal facilitates hundreds of billions of dollars of trade each year. It is a central point for international commerce, vital to U.S. supply chains, and critical to Panama\u2019s standing as a regional trade hub. Yet, China\u2019s growing commercial ties to Panama and the region have fueled U.S. concerns about Beijing\u2019s broader role in global shipping and port operations.<\/p>\n
Why does the canal matter?<\/strong><\/p>\n The fifty-one-mile long canal connects the Atlantic and Pacific Oceans and is a critical global maritime passageway. By allowing vessels to bypass the lengthy trip around the southernmost tip of South America, the canal significantly reduces both the time and cost of shipping. Upwards of thirteen thousand ships\u2014representing between 5 and 6 percent of global trade\u2014pass through the canal each year.<\/p>\n The canal is vital to both the U.S. and Panamanian economies. The United States remains the canal\u2019s biggest user, with some 40 percent of all U.S. container traffic traversing it annually. Meanwhile, revenue from the canal made up about\u00a04 percent\u00a0of Panama\u2019s gross domestic product in 2024. Other major users of the waterway include Chile, China, Japan, and South Korea.<\/p>\n In 2023, canal authorities increased the fees for passing ships and\u00a0limited the number\u00a0that could cross each day after water levels fell to record lows amid a prolonged drought. While levels have since climbed, experts say the need remains for new investments in the canal\u2019s water management systems as extreme weather events and other climate disruptions increasingly challenge global supply chains.<\/p>\n Why does Trump want to retake control of the canal?<\/strong><\/p>\n Trump has\u00a0accused Panama\u00a0of charging U.S. ships exorbitant rates to transit the canal, which he said was \u201cfoolishly\u201d given away by President Jimmy Carter as part of the Torrijos-Carter Treaties signed with Panama in 1977. Trump has also alleged that China secretly runs the canal and said he would not rule out using U.S. military force to\u00a0retake control.<\/p>\n \u201cTrump seems to be making an example out of Panama with the goal of getting other regional leaders to think twice before they take any bold steps to deepen ties with Beijing,\u201d said Will Freeman, CFR fellow for Latin America Studies.<\/p>\n Does China control the canal?<\/strong><\/p>\n There is no evidence that the Chinese government controls the canal. However, a subsidiary of CK Hutchison Holdings, a Hong Kong-based conglomerate and one of the world\u2019s leading container terminal operators, has managed two ports\u2014at Balboa on the Pacific coast and at Crist\u00f3bal on the Atlantic coast\u2014since 1997. Some experts say this\u00a0raises concerns\u00a0about potential Chinese influence over the ports, as Beijing\u2019s national security laws now\u00a0extend to Hong Kong.<\/p>\n Former Republican Senator Marco Rubio, now Trump\u2019s secretary of state, has criticized Chinese influence over the canal. In his Senate confirmation hearing, he said that Beijing, through the expansion of Chinese-owned companies, has \u201cthe ability to turn the canal\u00a0into a choke point\u00a0in a moment of conflict,\u201d which is \u201ca direct threat to the interests and the national security of the United States.\u201d<\/p>\n Over the past two decades, China has\u00a0developed close economic ties\u00a0with many Latin American countries. Beijing is currently South America\u2019s top trading partner and a major source of foreign direct investment and energy and infrastructure lending, including through its\u00a0Belt and Road Initiative\u2014of which Panama is a member. China has also been involved in several infrastructure projects in Panama, including the construction of a cruise-ship terminal and a convention center.<\/p>\n What is the United States\u2019 history with the canal?<\/strong><\/p>\n The United States gained the right to construct the artificial waterway in 1903 after backing Panama\u2019s bid to break away from Colombia, and the canal officially opened to traffic in 1914. The United States owned and operated the canal until 1977, when Carter negotiated the canal treaties amid Panama City\u2019s\u00a0growing demands for sovereignty\u00a0and Carter\u2019s desire for\u00a0better relations\u00a0with Latin America. The Torrijos-Carter Treaties established joint U.S.-Panamanian authority over the canal until 1999, at which point the United States relinquished full control of the canal to the Panama Canal Authority, an autonomous government agency of Panama.<\/p>\n However, the transfer of ownership was controversial. Some lawmakers staunchly opposed relinquishing U.S. control, saying the decision diminished U.S. influence in the region. In his 1976 campaign to become the Republican Party\u2019s presidential candidate, Ronald Reagan argued that the United States was the \u201crightful owner\u201d of the canal. Additionally, many policymakers saw the canal as essential for ensuring uninterrupted access to global shipping routes and believed maintaining control was necessary to safeguard U.S. economic interests abroad.\u00a0<\/p>\n Under the treaties, the United States has the right to act if there\u2019s a military threat to the canal\u2019s neutrality, but that doesn\u2019t enable Washington to unilaterally reassume ownership\u2014and experts say doing so would\u00a0violate international law. Today, many experts see the treaties as having\u00a0heralded a new era\u00a0of U.S.-Latin America relations.<\/p>\n How has Panama responded?<\/strong><\/p>\n Panamanian President Jos\u00e9 Ra\u00fal Mulino\u00a0swiftly rebuked\u00a0Trump\u2019s comments, asserting that \u201cthere\u2019s no possibility of opening any kind of conversation around [transferring canal ownership]\u201d and denying any Chinese involvement in the canal\u2019s operations. He also added that shipping fees are\u00a0calculated the same way\u00a0for every vessel that traverses the canal. Mulino, who has pledged greater cooperation with the United States, reiterated his position after Trump again mentioned regaining control of the waterway in his inaugural address.<\/p>\n (Source: Council on Foreign Relations)<\/p>\n<\/p><\/div>\n