Since winning the 2024 presidential election, Donald Trump has made the case for the US to retake control of the Panama Canal, arguing that fees for shipping passing through the Canal have become unfairly high and that China is exercising undue influence on the region. Cristina Ramirez writes that Trump’s rhetoric against a traditionally reliable US partner is unnecessary and counterproductive, and that there is little evidence of unfair passage fees or Chinese influence in Panama.

In December 2024, the then president-elect, Donald Trump suggested that the US would take back control of the Panama Canal citing high fees for ships passing through, and accusing Panama of not honoring the 1977 treaty which led to the Canal’s return to Panama in 1999. Since making these comments, and akin to building a legal case against Panama’s control of the Canal, President Trump and his administration have assembled a media-driven narrative based on demonstrable falsehoods to justify an erratic foreign policy supposedly aimed at curbing China’s influence in the region.

The arguments in the past few months have continued to shift. They have ranged from claiming that the Chinese communist party runs the Canal to asserting that the Canal is “obsolete” due to Panama´s mismanagement. In spite of the lack of evidence, this discourse resonates beyond Trump´s MAGA base as reflected in the public hearings by the US Senate Committee on Commerce, Science, and Transportation and in conservative media. Although such popularity may well make it an expedient political tool in Trump’s hands, it nonetheless is a reckless course of action for US diplomacy.

Ongoing conflict over the Panama Canal

When defending the 1977 Torrijos-Carter treaties which transferred the Canal to Panama, President Jimmy Carter explained that they aimed to “change Panama from a passive and sometimes deeply resentful bystander into an active and interested partner, whose vital interests will be served by a well-operated canal. This agreement leads to cooperation, not confrontation, between our country and Panama.” History has proven Carter right. The Canal under Panama´s control has been managed efficiently and securely. But beyond the Canal, Panama has been a reliable partner of the US in the region; the Torrijos-Carter treaties have eliminated the leading cause of tension between the two nations. 

For the better part of the 20th century, the relationship between the US and Panama was marred by conflict, which stemmed from the US’ insistence on claiming “sovereignty” over the Canal Zone and had which essentially created a US-colonial enclave. This state of affairs culminated with violent clashes in 1964 when students were prevented from raising the Panamanian flag within the Canal Zone. The grim result was the death of 22 Panamanians and four Americans and the severing of diplomatic relations. What followed was a process to replace the 1903 agreement which concluded with the Torrijos-Carter treaties, according to which, after a 33-year waiting period, the US handed back control of the Canal and its territories in 1999 and created a framework for a new and more positive relationship between the two countries.

Before the signing of the new treaties, Panama was one of the largest recipients of US aid per capita, which was funded partly to compensate for the inequities of the colonial structure. Since then, Panama has barely received or sought foreign assistance; It has been a stable liberal democracy for 35 years, producing center-right governments which have cooperated on relevant topics for the US and the region, from illegal migration to combating drug trafficking.

Why is Trump creating confrontation over the Panama Canal?

So why drag Panama into the confrontation between China and the US? Trump’s assertions that the Canal has been given away to China or that its military influences the administration of the Canal can be easily disproved. It is also evidently untrue that 38,000 Americans died during its construction. The crux of the answer seems to revolve around two concerns, one commercial in nature and the other security-driven, which do not necessarily have a causal connection.

Trump has argued that the increase in tolls is “ripping” off” the US. This is not true, as all vessels, irrespective of their nationality, pay the same tolls as required by the Neutrality Treaty. This treaty already grants US war vessels the right to transit the Canal with preference to those of other nations, which also translates into savings as such vessels do not have to pay the reservation fees regularly charged to ensure a more expeditious passage. In any event, the amount of tolls paid by such vessels is immaterial (calculations set them around 17 million since 2015). 

Although the cost of passing through the Canal has increased, such increases have been transparent and non-discriminatory and have funded billion-dollar maintenance and capacity expansions, ensuring uninterrupted and efficient traffic through the Canal, allowing new industries (such as the US liquid gas industry) to boost their use of the Canal thanks to the substantial savings offered.

“lock gate closing behind us” (CC BY-NC-SA 2.0) by WHardcastle

Panama has also invested significant resources into increasing water management efficiency, a key concern due to the challenges of climate change. In 2024, the Panama Canal had to operate under restricted capacity due to an El Niño-induced drought, leading to temporary toll increases to manage the situation. Panama has completed studies to address the issue, which involves access to a new reservoir (“embalse”) to ensure a stable water supply.

Little evidence of Chinese influence despite Trump’s concerns

The other concern centers on growing Chinese influence in Panama and that an international Chinese company, Hutchinson Ports, which manages two ports near the canal entrances, creates a threat to the security of the Canal. No evidence has been provided to substantiate this claim. Such ports are not part of the Canal’s operations, and several non-Chinese port operators are in the same area. Moreover, the contract which concessioned the ports – highly unpopular in Panama, it must be noted – resulted from an international public bid process and was signed in January 1997, nearly three years before the handover of the Panama Canal in 1999 when it was still under US control. Neither is there evidence that China exerts undue influence in Panama. Yes, since 2017 Panama established diplomatic relations with China – one of the last countries to do so – and commercial activity between the two countries has increased. However, Panama has almost zero debt with China, and negotiations for a free trade agreement have not yielded results. The Belt and Road Initiative has not generated significant Chinese investment, and Panama recently announced that its participation in the scheme will not be renewed upon its expiration. The relationship between Panama and China pales when compared to other Latin American countries’ reliance on China, which should cause more concern to the US. 

This is why Trump’s discourse seems particularly unnecessary and counterproductive with a country that has traditionally been the US’s closest partner in the region and where cooperation with its friendly government could yield meaningful results.

Instead, the Trump administration seems to be pushing for concessions that cannot be granted, as exemplified by the false statement from Secretary of State, Marco Rubio, which claimed that Panama had agreed to stop charging tolls to US government vessels, an outright violation of the Neutrality Treaty, without any clear indication of what the US pursues. By pushing falsehoods, the Trump administration has manufactured a crisis that appears more performative than substantive. Thus, the following question arises: is this aggressive and unwarranted stance toward Panama merely a distraction from domestic issues? It is hard to say, but it certainly showcases an administration willing to employ the most outrageous falsehoods to achieve even the most insignificant gains.

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• Note: This article gives the views of the author, and not the position of USAPP – American Politics and Policy, nor the London School of Economics. 
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