In his inaugural address, US President Donald Trump reignited controversy over the Panama Canal, issuing a stark warning to both Panama and China. Trump vowed to “take back” the canal, accusing Panama of breaching promises and overcharging the US Navy, while alleging without evidence that China has control over the waterway.
“We have been treated very badly from this foolish gift that should have never been made,” Trump declared. He further claimed, “China is operating the Panama Canal. We didn’t give it to China; we gave it to Panama, and we are taking it back!”
The Panama Canal, a vital link between the Atlantic and Pacific oceans, was built over a century ago through US intervention. In 1903, the US supported Panama’s independence from Colombia, securing rights to construct and control the canal. Opened in 1914, the canal remained under US jurisdiction until its transfer to Panama in 1999.
Despite Panama’s ownership, the canal remains a strategic economic and geopolitical asset. In 2024, it generated $5 billion in profits, contributing over 23% to Panama’s GDP. Panamanians view the canal as a cornerstone of their sovereignty, making Trump’s rhetoric particularly inflammatory.
Trump’s remarks align with his broader strategy to counter China’s global influence. While there’s no evidence that China controls the canal, Beijing’s significant investments in Latin America, including Panama, fuel US concerns. China’s growing ties with Panama—formalized in 2017—underscore its strategic interest in the region.
This dispute over the canal also dovetails with larger tensions, including China’s ambitions in Taiwan and its Belt and Road Initiative. Trump’s stance reflects his commitment to curbing China’s influence, a recurring theme in his foreign policy.
Although Panama has dismissed Trump’s allegations, emphasizing its sovereignty and the fair administration of the canal, it can no longer deny its growing ties with China. However, historical U.S. interventions in the country—most notably the 1989 invasion to oust dictator Manuel Noriega—still loom large in Panamanian consciousness, and Trump might not hesitate to repeat history.
Ovidio Diaz-Espino, author of How Wall Street Created a Nation: J.P. Morgan, Teddy Roosevelt, and the Panama Canal, warns that Panama’s lack of a military leaves it vulnerable. “All he [Trump] needs is to land ten thousand troops, and that’s it,” Diaz-Espino remarked.
In fact, Trump’s stance on the Panama Canal is part of a broader geopolitical chess game. His pledges to address the Russia-Ukraine war and counter China’s ambitions suggest an aggressive approach to global diplomacy. These moves raise questions about the potential for escalating tensions and the risk of a broader conflict.
As the world watches Trump’s return to the White House, the Panama Canal controversy underscores the high stakes of US foreign policy. Will this be a calculated move to counter China or a step toward rekindling historical disputes? The answer could reshape the global balance of power.
