President Donald Trump’s administration sees Chinese influence as a massive threat.
During his inauguration speech, he repeated his desire to retake control of the Panama Canal, the vital strategic waterway that connects the Atlantic and Pacific oceans.
Mr. Trump’s secretary of state, Marco Rubio, said at his confirmation hearing that China is “the most potent and dangerous near-peer adversary this nation has ever confronted.” During his visit to Panama on Sunday, he stated that Panama must reduce China’s influence in the canal.
Why We Wrote This
The Trump administration wants to blunt what it says is China’s influence over the Panama Canal. Here, we explain the stakes and the U.S. relationship with Panama and the canal.
In a U.S. State Department summary of his meeting with Panamanian President José Raúl Mulino, Mr. Rubio said that if the Central American country didn’t do that, “It would require the United States to take measures necessary to protect its rights under the treaty.”
Here’s a deeper look at some questions raised by Mr. Trump’s comments.
What’s the status of the canal now?
The canal is owned and administered by the Panama Canal Authority, a Panamanian government agency. The U.S. controlled it from its 1914 completion until 1999, when it was handed over to Panama under the 1977 Torrijos-Carter Treaties. The first of those treaties permits the U.S. military to preserve the canal’s neutrality, allowing perpetual U.S. use of the canal.
The canal is one of the most vital waterways in the world and is especially important to the U.S. An estimated 2.5% of global seaborne trade sails through it, and 40% of all U.S. container traffic traverses it annually, with the U.S. accounting for 74.7% of all long tonnage, a maritime measure of weight, that goes through the canal.
Mr. Trump claims that “China is operating the Panama Canal,” but that is not the case. A pair of Chinese companies, the Landbridge Group and the Hong Kong-based CK Hutchison Holdings, operate ports at both ends of the canal. But the three other ports near the canal are operated by an American firm, a Taiwanese firm, and a Singaporean firm, respectively.
The canal is facing a range of issues, including intense and widespread droughts. That has lowered water levels, restricted the number of ships able to pass, and led the Panama Canal Authority to raise the toll price to compensate.
What are Trump’s issues with the canal?
Higher tolls are among the reasons Mr. Trump said that American shipping was being “severely overcharged.” Ships pay tolls to use the canal, and because the U.S. has the most shipping, it pays a huge quantity of those tolls. Panama says the toll rates, which are calculated using a universally applicable formula, are being applied fairly to all ships, regardless of nationality.
In addition to its economic value, the canal is important to the U.S. geopolitically. It connects the Atlantic and Pacific oceans, and navies would have to sail around the entirety of South America if they lost access. It also is a core component of Latin America’s economy and a linchpin for U.S. engagement with the region.
“I think people in the Trump administration just want to make sure that they have absolute control of [the canal],” says Michael Beckley, director of the Asia Program at the Foreign Policy Research Institute. “The Trump administration is looking for ways to batten down the hatches and reduce America’s exposure to threats from China.”
How does this fit into larger questions of U.S.-China relations?
Mr. Trump’s anti-China rhetoric is a keystone in what he is saying about Panama. The Chinese companies that control the ports on each end could facilitate the Chinese government collecting important data on what passes through the canal, Mr. Beckley says.
On a larger scale, China has been expanding its presence in Latin America through widespread investment and infrastructure projects – including a recently opened megaport in Chancay, Peru. Securing the Panama Canal, multiple experts say, could be a way of checking Chinese influence.
Douglas Paal, a researcher at the Carnegie Endowment for International Peace, says there is a new wave of supersize shipping vessels too big for the Panama Canal that are increasingly used by Chinese shipping. They are more efficient, and the new port in Peru could offer competition to the canal with highways connecting it to the Atlantic.
How could this play out?
Dr. Beckley, Dr. Paal, and Robert Ross, a professor of political science at Boston College and expert on Chinese security policy and U.S.-China relations, all see Mr. Trump’s desire to reclaim the Panama Canal as showmanship.
“Frankly, I think a lot of this is [Mr. Trump] just chauvinistically throwing around American power and showing off American primacy,” says Dr. Beckley. It seems to be more of a public relations move than a geopolitical one.
The U.S. does have leverage to pressure Panama, as its large share of shipping provided most of the $2.5 billion the canal made for the Panamanian government in 2023, on top of trade relations and $3.8 billion of U.S. investment annually into industries like energy and infrastructure.
Panama’s President Mulino has stressed that sovereignty over the canal is not up for debate. But after talks with Mr. Rubio Feb. 2, he outlined the possibility of repatriating more migrants and signaled he would review agreements involving China and Chinese businesses.
Dr. Paal also believes that Mr. Trump’s focus will shift away from Panama, as issues in the Middle East and Asia might take precedence.
The use of military force is also largely out of the question, according to Dr. Ross. “There’s just no Chinese security presence there that could diminish American access to the canal,” he says. At the end of the day, he says, the U.S. simply has a formidable navy that is closer to the canal, preventing any serious challenge to that access.
Additionally, Mr. Trump has said he wants to end wars in Ukraine and the Middle East, and has threatened to leave NATO. If Mr. Trump really wanted to emphasize bringing American troops home, Dr. Ross says, an occupation of Panama would be a complete U-turn.
Even if the U.S. invaded, Dr. Paal says, “China [could] say ‘Taiwan belongs to us, and we’re taking it back, too.’ And we would be so busy with our fleet in the Panama canal area, we would already have too few ships to protect Taiwan.”
