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.
Trumps bluntly stated desire, alongside comments he has made aboutacquiring Greenland, would violate the internationalprinciple of sovereigntyand 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 Panamas standing as a regional trade hub.
Yet, Chinas growing commercial ties to Panama and the region have fueled U.S.
concerns about Beijings broader role in global shipping and port operations.Why does the canal matter?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 shipsrepresenting between 5 and 6 percent of global tradepass through the canal each year.The canal is vital to both the U.S.
and Panamanian economies.
The United States remains the canals biggest user, with some 40 percent of all U.S.
container traffic traversing it annually.
Meanwhile, revenue from the canal made up about4 percentof Panamas gross domestic product in 2024.
Other major users of the waterway include Chile, China, Japan, and South Korea.In 2023, canal authorities increased the fees for passing ships andlimited the numberthat 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 canals water management systems as extreme weather events and other climate disruptions increasingly challenge global supply chains.Why does Trump want to retake control of the canal?Trump hasaccused Panamaof charging U.S.
ships exorbitant rates to transit the canal, which he said was foolishly 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 toretake control.Trump 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, said Will Freeman, CFR fellow for Latin America Studies.Does China control the canal?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 worlds leading container terminal operators, has managed two portsat Balboa on the Pacific coast and at Cristbal on the Atlantic coastsince 1997.
Some experts say thisraises concernsabout potential Chinese influence over the ports, as Beijings national security laws nowextend to Hong Kong.Former Republican Senator Marco Rubio, now Trumps 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 the ability to turn the canalinto a choke pointin a moment of conflict, which is a direct threat to the interests and the national security of the United States.Over the past two decades, China hasdeveloped close economic tieswith many Latin American countries.
Beijing is currently South Americas top trading partner and a major source of foreign direct investment and energy and infrastructure lending, including through itsBelt and Road Initiativeof 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.What is the United States history with the canal?The United States gained the right to construct the artificial waterway in 1903 after backing Panamas 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 Citysgrowing demands for sovereigntyand Carters desire forbetter relationswith 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.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 Partys presidential candidate, Ronald Reagan argued that the United States was the rightful owner 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.Under the treaties, the United States has the right to act if theres a military threat to the canals neutrality, but that doesnt enable Washington to unilaterally reassume ownershipand experts say doing so wouldviolate international law.
Today, many experts see the treaties as havingheralded a new eraof U.S.-Latin America relations.How has Panama responded?Panamanian President Jos Ral Mulinoswiftly rebukedTrumps comments, asserting that theres no possibility of opening any kind of conversation around [transferring canal ownership] and denying any Chinese involvement in the canals operations.
He also added that shipping fees arecalculated the same wayfor 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.(Source: Council on Foreign Relations)