Trump Wants the Panama Canal Back. Here's Why That's Both Understandable and Dangerous.

The Historical Context

The United States built the Panama Canal, completed in 1914, and controlled it for most of the 20th century. Under a treaty negotiated by the Carter administration and ratified in 1977, control transferred to Panama in 1999, with the US retaining the right to defend the canal's neutrality.

For decades, this arrangement worked smoothly. Panama operates the canal, collects the tolls, and the US retains guaranteed access.

What Changed: China's Presence

The legitimate concern that animates Trump's canal rhetoric is real. A Hong Kong-based company, Hutchison Whampoa (now CK Hutchison), has operated ports at both ends of the canal since 1997. Chinese-linked companies have investment stakes in port facilities, logistics infrastructure, and telecommunications networks throughout Latin America.

Whether this constitutes a direct operational threat to canal access is disputed by most security analysts — the canal is operated by the Panama Canal Authority, a Panamanian government entity, not by port operators. But Chinese presence in the logistics infrastructure of a strategically critical waterway is a legitimate concern.

Why the Approach Is Wrong

Threatening Panama — making public demands that it relinquish control, implying military options, accusing it of charging "extremely unfair" rates (the US military pays no tolls under the treaty) — is not effective policy.

Panama is a sovereign country and a friendly US neighbor. It has no reason to voluntarily give up the canal. Threatening it alienates a cooperative partner, damages US standing in Latin America broadly, and gives China an opening to position itself as Panama's protector against an aggressive US.

The leverage the US has — economic relationships, security partnerships, development assistance — is far more effective when deployed through diplomacy than through threats.

What Good Policy Would Look Like

Addressing Chinese logistical influence in Panama and Latin America broadly requires:

• Investment alternatives: offering Panama and other countries American investment and development partnerships that compete with Chinese offers
• Port security partnerships: working bilaterally to establish security protocols around strategically sensitive port infrastructure
• Diplomatic engagement: quiet conversations about Chinese intelligence concerns rather than public ultimatums

The canal situation is an example of a real strategic challenge being handled in the worst possible way — generating headlines and hostility while accomplishing nothing.

FAQ

Who owns the Panama Canal? The Panama Canal is owned and operated by the Republic of Panama through the Panama Canal Authority, a Panamanian government agency. Ownership transferred from the US in 1999.

Does China control the Panama Canal? No. China does not control the canal. Hong Kong-based Hutchison Whampoa/CK Hutchison has operated ports at the canal's entrances, but port operations are separate from canal transit operations, which are run by Panama.

Does the US pay to use the Panama Canal? Commercial US ships pay normal tolls. The 1977 treaty provides that US government and military vessels may transit the canal under terms to be agreed but exempts them from standard commercial rates.