United States President-elect, Donald Trump has threatened to demand control of the Panama Canal after accusing Panama of charging excessive rates on US ships passing through the canal; one of the busiest waterways in the world.

Trump wrote on his Truth Social platform, “Our Navy and Commerce have been treated in a very unfair and injudicious way.”

“The fees being charged by Panama are ridiculous, especially knowing the extraordinary generosity that has been bestowed to Panama by the US. This complete ‘rip-off’ of our Country will immediately stop.”
Donald Trump

The US largely built the canal in 1914 and administrated territory surrounding the passage for decades.

However, Washington fully handed control of the canal to Panama in 1999 after a period of joint administration.

Trump also hinted at China’s growing influence around the canal, which connects the Atlantic to the Pacific oceans. “It was solely for Panama to manage, not China, or anyone else,” he said, adding, “We would and will NEVER let it fall into the wrong hands!”

“It was not given for the benefit of others, but merely as a token of cooperation with us and Panama.

“If the moral and legal principles of this magnanimous gesture of giving are not followed, then we will demand that the Panama Canal be returned to us, in full, and without question. To the Officials of Panama, please be guided accordingly.”
Donald Trump

An estimated 5 percent of global maritime traffic passes through the Panama Canal, which allows ships travelling between Asia and the US East Coast to avoid the long, hazardous route around the southern tip of South America.

The Panama Canal Authority reported in October that the waterway had earned record revenues of nearly $5bn in the last fiscal year.

Trump said that the Panama Canal was a “vital national asset” for the US, calling it “crucial” for commerce and national security.

An Expected Shift In US Diplomacy

Trump’s Panama thinking underscores an expected shift in US diplomacy after he takes office in January, particularly in regard to China and European security.

On Friday, the Financial Times reported that Trump’s team had told European officials that he will demand NATO member states increase defence spending to 5% of their GDP.

Last month, Trump said he would impose tariffs on Mexican and Canadian imports on day one of his administration and that the measures would remain until the “invasion” of undocumented migrants and drugs came to an end.

Trump’s rhetorical threat to Panama, however, comes 25 years after the US handed full control of the canal to Panama following a period of joint administration.

In 1977, President Jimmy Carter negotiated the Torrijos-Carter Treaties that gave Panama control of the canal and the Neutrality Treaty, which allowed the US to defend the canal’s neutrality. The canal is currently administered by the Panama Canal Authority.

The US completed the 51-mile canal through the Central American isthmus in 1914 and is still the canal’s biggest customer, responsible for about three quarters of the cargo transiting through each year.

China is the canal’s second-biggest customer, and a Chinese company based in Hong Kong controls two of the five ports adjacent to the canal, one on each side.

However, a prolonged drought has hampered the canal’s ability to move ships between the Atlantic and Pacific oceans.

National Economic Council Director, Lael Brainard said last week that shipping disruptions contributed to the supply-chain pressures.

The Panama Canal has experienced a 29% decrease in ship transits over the past fiscal year due to severe drought conditions, according to the canal authority.

From October 2023 to September 2024, only 9,944 vessels passed through the canal, compared to 14,080 the previous year.