Why is Trump threatening to take control of the Panama Canal?

Newly inaugurated U.S. President Donald Trump is pressing to reclaim the Panama Canal, the world's second busiest interoceanic waterway, spurring issues that the United States might get into the Main American nation.

Trump argues that Panama has actually broken a promise of neutrality made when the United States moved the canal to Panama in 1999, incorrectly claiming that China is running it.

The canal is run by the Panama Canal Authority, an self-governing agency managed by the Panamanian federal government.

WHY IS THE CANAL KEY FOR THE U.S?

The Panama Canal, an 82-km (51-mile) artificial waterway that links the Pacific and Atlantic Oceans, saves ships countless miles and weeks of travel. Before it was constructed, ships needed to make the long journey around the stormy suggestion of South America in order to travel by sea between the two oceans.

Over two-thirds of all freight travelling through the canal today originates from or is destined for the United States.

The U.S. completed building of the canal in the early 20th century, a job begun by France that expense over 25,000 employees' lives.

Following pressure from anti-colonial motions, the U.S. signed treaties in 1977 approving Panama control and full sovereignty over the canal zone and ensuring its irreversible neutrality. These worked in 1999. In between 2023 and 2024, a serious dry spell aggravated by environment change lowered the level of lakes feeding the canal, requiring its administrator to restrict transits and vessel draft, which increased costs and waiting times.

The passage limitations were lifted late last year, but the waterway has not yet seen a full return of normal traffic as lots of shippers, particularly bulk providers and melted natural gas tankers, have continued taking alternative routes.

WHAT IS CHINA'S INVOLVEMENT?

In his inaugural address recently, Trump repeated allegations he made following his election success that Panama has actually ceded control of the canal to China. He has likewise said Chinese soldiers are stationed at the canal, without offering evidence.

Both Panama's federal government and the Chinese government have declined those assertions.

CK Hutchison Holdings, a Hong Kong-based company, has for more than 20 years operated the ports of Balboa and Cristobal at the canal's Pacific and Atlantic entrances. The company is openly noted and not financially tied to the Chinese government, though Hong Kong firms go through federal government oversight.

Private U.S. firm SSA Marine operates the MIT port on the Atlantic coast, Taiwan's Evergreen Group operates another Atlantic port known as CCT, and Singapore's PSA International runs the Rodman port on the Pacific coast, according to business and government sites. China's financial influence has been growing in Latin America, sustaining concerns in Washington that the resource-rich region will tilt to Chinese interests rather than those of the United States.

Panamanian President Jose Raul Mulino has actually asserted that the canal is and will continue to be Panamanian.

Panama's authorities recently announced an audit on CK Hutchison's run ports, saying they are examining the company's compliance with concession agreements and whether it is effectively reporting its earnings and state payments.

CK Hutchison's regional arm did not respond to a Reuters request for comment, but said in a statement it has actually paid the state hundreds of millions of dollars during its concession and that its manpower is 99.9% Panamanian.

CONFLICT OVER TOLLS

Trump has consistently complained that the costs charged to ships to use the canal are too high, and has actually accused Panama of levying unjust tariffs on U.S. products.

American ships are being significantly overcharged and not treated fairly in any method and that consists of the United States Navy, Trump said in the address.

In between the fiscal years ended in 2020 and 2023, the canal's. toll earnings increased nearly 26% to $3.35 billion, according to. its yearly reports. In the fiscal year ended last September, the. canal balanced out less vessel traffic with a water surcharge, which. it combined with slot auctions that rose to as much as $4. million per vessel.

The canal's costs are not separated by a ship's flag,. native land, or of destination. The United States does not. have a relevant industrial fleet under its flag, and U.S. military ships enjoy priority of passage.

Mulino said the tariffs are thoroughly and transparently. evaluated according to require.

According to shipping specialists and freight movers, tolling charge. increases have actually been applied in the last few years by other secret. waterways amid demand spikes and geopolitical disputes.

WHAT'S NEXT. Trump's risk is currently impacting Panama's debt rating. U.S. investment bank JPMorgan reduced its suggestion on the. country's bonds over threats to the canal, a key source of. national income.

U.S. Secretary of State Marco Rubio is scheduled to visit. Panama in between late January and early February, his first. foreign see in the post.

Immigration will be a focus of the journey. Mulino, who took office in 2015, has actually taken a harder line on. migration than his predecessor, accepting U.S.-funded. deportation flights from Panama and installing barbed wire at. the Darien Gap, a harmful jungle path many migrants take. crossing on foot out of South America on their method to the U.S. border.

(source: Reuters)