Introduction
On January 20, 2025, Donald Trump was formally sworn in as the President of the United States for a second term. During his inaugural address, Trump made bold declarations about America’s future, setting forth his vision for the next four years. Among his many statements, one particularly controversial issue stood out—his strong stance on reclaiming American control over the Panama Canal.
Trump claimed that it had been a foolish decision for the U.S. to give up control of the canal to Panama, falsely asserted that 38,000 American lives were lost during its construction, and declared that America had been treated unfairly in the process. He further accused Panama of overcharging U.S. ships and allowing China to operate the canal, which he described as a major strategic failure.
Trump’s statements and thinly veiled threats to take back control of the canal, either economically or militarily, have ignited a geopolitical firestorm. His words have been met with strong resistance from Panama’s President, José Raúl Mulino, who has flatly rejected any negotiations on the matter, reaffirming Panama’s sovereignty over the canal.
Trump’s sudden interest in the Panama Canal seems to have come out of nowhere, but in reality, the issue has been quietly simmering for decades within certain sectors of the U.S. government. To understand where this rhetoric is coming from and what might happen next, we need to explore the history, geopolitical significance, and potential ramifications of Trump’s ambitions regarding the Panama Canal.
The Historical Context of U.S. Involvement in the Panama Canal
The Birth of the Canal: A Strategic Asset for America
The idea of a canal through Panama dates back centuries, but it wasn’t technologically feasible until the Industrial Revolution. The French were the first to attempt its construction in 1881 but failed due to disease, financial mismanagement, and engineering challenges. More than 20,000 workers died before the French abandoned the project in 1890.
The U.S., recognizing the canal’s immense strategic value, took over the project in 1904 and completed it in 1914. The Panama Canal significantly shortened the travel time between the Atlantic and Pacific Oceans, allowing for faster deployment of naval and trade vessels.
For most of the 20th century, the U.S. controlled the canal and the surrounding Panama Canal Zone, a stretch of land five miles wide on either side of the canal. However, this presence fueled resentment among Panamanians, who viewed it as an extension of American imperialism.
The Fight for Panamanian Sovereignty
The 1964 riots, known in Panama as Martyrs’ Day, were a turning point in the country’s struggle to reclaim control over the canal. After years of increasing tensions, the U.S. finally agreed to gradually transfer sovereignty over the canal.
In 1977, President Jimmy Carter and Panamanian leader Omar Torrijos signed the Torrijos-Carter Treaties, which laid out the framework for the U.S. handover of the canal to Panama. The transition was completed on December 31, 1999, ending almost a century of American control.
Despite objections from Ronald Reagan and conservative politicians, the decision to return the canal was seen as a way to improve America’s relations with Latin America and prevent future conflicts over the issue.
The 1989 U.S. Invasion of Panama
The last time the U.S. used military force in Panama was in December 1989, when President George H.W. Bush ordered an invasion to remove dictator Manuel Noriega. The operation lasted just a few days and led to Noriega’s capture, but it also resulted in significant civilian casualties and long-lasting resentment toward American interventionism.
This historical precedent is crucial in understanding the risks of Trump’s rhetoric today—a military conflict in Panama is not unthinkable, but it would come with severe consequences.
Why Trump is Suddenly Interested in the Panama Canal
At first glance, the Panama Canal does not appear to be a pressing issue for the U.S. government. However, several geopolitical factors have brought it back into the spotlight:
1. Rising Chinese Influence in Panama
Trump’s claim that China is controlling the Panama Canal is false, but there is some truth to the broader concern about Chinese influence in the region.
- In 2017, Panama cut ties with Taiwan and established diplomatic relations with China.
- Chinese state-backed companies have been investing heavily in Panamanian infrastructure, including two major ports at either end of the canal.
- The Chinese firm Hutchison Ports operates these ports, raising fears in Washington that China could use them for military or intelligence purposes in the future.
2. Increased Costs for U.S. Ships
Trump’s argument that Panama is overcharging U.S. ships also lacks solid evidence.
- Panama recently raised transit fees for all vessels, but this was due to a severe drought that reduced the canal’s capacity.
- U.S. warships have paid minimal fees to use the canal—only $17 million over the last nine years, which is a tiny fraction of the U.S. defense budget.
Despite these facts, Trump’s rhetoric resonates with his base, much like Reagan’s opposition to the canal handover in the 1970s.
Potential Scenarios: What Happens Next?
With Trump in office and doubling down on his Panama Canal stance, there are several possible outcomes:
1. Economic Pressure on Panama (Likely but Ineffective)
- Trump could try to force Panama into renegotiating by imposing economic sanctions or cutting U.S. investment in the country.
- However, other nations wouldn’t follow suit, meaning Panama could still trade freely with the rest of the world, including China.
- This approach would likely backfire, pushing Panama further into China’s sphere of influence.
2. Diplomatic Negotiations (Preferred but Unlikely)
- The U.S. could negotiate stricter security protocols to prevent Chinese military presence at the ports.
- However, Panama has already rejected negotiations, making this an uphill battle.
3. Military Action (Extremely Dangerous and Catastrophic)
- A full-scale invasion of Panama to seize the canal would be an unmitigated disaster.
- Panama has no standing army, so U.S. forces could easily occupy the canal, but they would then face massive domestic and international backlash.
- Such an invasion would destroy America’s reputation and potentially spark a new insurgency, similar to Iraq or Afghanistan.
- China would respond aggressively, escalating tensions globally.
Conclusion: A Dangerous Gamble
Trump’s threats toward the Panama Canal have ignited a geopolitical crisis that didn’t need to exist. While there are legitimate concerns about China’s growing influence, there are far better solutions than military intervention.
Panama will never willingly give up control of its most prized national asset. Trump’s administration must carefully weigh the economic, political, and military risks before escalating this conflict any further.
For now, the world waits to see if Trump’s words are merely bluster or if he is seriously considering military action—an option that could have disastrous global consequences.
FAQ
1. Does China control the Panama Canal?
No. The Panama Canal Authority operates the canal. However, a Chinese company manages two nearby ports, raising concerns in Washington.
2. Why did the U.S. give up control of the canal?
The handover was part of the Torrijos-Carter Treaties (1977) to improve relations with Panama and Latin America.
3. Could the U.S. retake the canal?
Legally, no. The treaties prevent any unilateral action by the U.S., and a military takeover would be seen as an act of war.
4. What happens next?
Diplomatic tensions will likely continue, but an invasion remains unlikely—at least for now.
