Make the Canal Great Again: Trump Eyes Panama’s Waterway for a Comeback

What Happened?

President-elect Trump threatened to retake U.S. control over the Panama Canal Sunday, accusing Panama of charging exorbitant rates for the U.S. to use the waterway.

This subsequently drew a fiery response from Panamanian President Jose Paul Mulino.

Speaking in Arizona, Trump also added that he would not let the canal fall into the ‘wrong hands,’ and warned against a potential Chinese influence on the passage. After the event, he posted an image on Truth Social and Instagram of an American flag flying over a body of water with the caption ‘Welcome to the United States Canal!’

While it is not common for a U.S. president to state or even imply that they could push a sovereign country to hand over territory, this could signal a big shift in U.S. diplomacy under the incoming administration.

Why it Matters

In his first term, Trump was unafraid to threaten allies with strong-arm tactics and use emotive rhetoric to clarify his intentions.

‘It was given to Panama and the people of Panama, but it has provisions,’ Trump said of the canal, which was once owned by the United States but was handed over to Panama decades ago. ‘If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, then we will demand that the Panama Canal be returned to us, in full, quickly and without question.’

Panamanian President Mulino does not exactly seem to be on the same page.

In a statement released shortly after Trump's comments, Mulino stated that Panama's independence was non-negotiable, and shot down any Chinese involvement in the canal's administration or operation. He also defended the rates charged for passage through the canal and did not seem to have any intent to change them.

While China does not directly control or administer the canal, a subsidiary of Hong Kong-based CK Hutchinson Holdings has managed two ports located on the canal's Pacific and Caribbean entrances.

The canal was built largely through U.S. effort and the U.S. administered the territory surrounding the passage for decades. However, the U.S. and Panama signed a pair of accords in 1977 that paved the way for the canal to come back under full Panamanian control. The U.S. officially handed over control of the passage in 1999. Mulino has remained indignant in his defense of keeping the canal under Panamanian control.

‘Every square meter of the Panama Canal and the surrounding area belongs to Panama and will continue belonging (to Panama),’ Mulino said in his statement, which was released on X.

Trump then responded to Mulino: ‘We'll see about that!’

What it Means

The canal is one of the most heavily used in the world, allowing up to 14,000 ships to cross per year, and accounts for 2.5% of total global seaborne trade. The waterway is a crucial passage for U.S. imports in the auto industry and commercial goods coming by way of Asia, as well as for the U.S.'s own exports of commodities, such as liquefied natural gas.

While it is not currently clear how Trump plans on regaining control over the waterway, he would not have much in the form of recourse under international law should he decide to make any plays for the canal.

This is hardly the first time Trump has alluded to or made open statements regarding territorial expansion.

Recently, Trump has made tongue-in-cheek comments about turning Canada into the 51st U.S. state but does not seem to seriously consider the matter. During his first term, Trump expressed interest in buying Greenland and was quickly rebuffed by the Danish government, as it is their territory.