Newly inaugurated U.S. President Donald Trump has threatened to “take back” the Panama Canal, the world’s second busiest interoceanic waterway, raising concerns of a potential U.S. invasion of Panama. Trump claims that Panama has violated a neutrality pledge made when the canal was transferred from the U.S. to Panama in 1999, falsely alleging Chinese control of the canal.
The Panama Canal, a vital 82-km (51-mile) artificial waterway that connects the Pacific and Atlantic Oceans, is key for the U.S. as over two-thirds of its cargo flows through the canal. It drastically shortens shipping distances compared to the alternative route around the southern tip of South America.
The U.S. constructed the canal in the early 20th century, with Panama assuming full sovereignty in 1999 following a 1977 treaty that guaranteed the canal’s neutrality. However, recent droughts and climate change have caused water levels to drop, limiting traffic and increasing costs.
Trump’s accusations of Chinese influence center on CK Hutchison Holdings, a Hong Kong-based company operating two ports at the canal, though it has no direct ties to the Chinese government. Despite China’s growing presence in Latin America, both Panama and China have denied Trump’s claims.
Panamanian President José Raúl Mulino maintains the canal remains under Panamanian control. Panama is conducting an audit of the CK Hutchison-operated ports to ensure compliance with agreements.
Trump has also criticized Panama for what he deems excessive tolls, claiming that U.S. ships, including the military, are unfairly charged. The Panama Canal’s toll revenue has increased significantly in recent years, reflecting higher demand, though Panama maintains that fees are fairly set.
Trump’s remarks have impacted Panama’s financial standing, with JPMorgan downgrading the country’s debt rating. U.S. Secretary of State Marco Rubio is set to visit Panama soon, with a focus on immigration issues, especially as Panama has taken a harder stance on migration, including U.S.-funded deportation flights.
