Why Trump wants to gain control of Panama Canal
Panama may be the first subject of Trump’s geopolitical sabre-rattling with China, but it will certainly not be the last.
Ships using the Panama Canal to sail from Pascagoula, Mississippi in the United States (US)’s east coast to San Diego, California, save an additional distance of 16,457 km as opposed to the longer, more dangerous route through Cape Horn at the southern tip of South America. The sheer magnitude of this distance is hard to fathom. That is more than four times the diameter of the Moon and twice the diameter of Mars. The voyage takes eight days through the canal; through Cape Horn, it takes 26 days.
A particular class of ships makes this voyage — US naval ships and submarines. The USS Santa Fe and the USS Minnesota, both nuclear submarines, the USS Zumwalt, the American navy’s newest and most technologically advanced warship, the USS Omaha and the USS Jackson, both littoral combat ships, are some of the vessels that have transited the canal recently. These ships make regular journeys through the US’s east and west coast to move from shipbuilding sites to future homeports, to upgrade weapons systems in shipyards across coasts, or to join naval exercises on either coast.
This is what makes the Panama Canal the most strategic piece of critical infrastructure for the US outside of its territory. Any delays, obstructions or threats to this transit point, especially during times of war or conflict, would be disastrous for the US. Add to this an element of geoeconomics: 40% of the US’s total container trade flows through the Panama Canal. This includes trade between the US’s east coast to Asia and the western coasts of the Americas, and trade between the US’s west coast to Europe, Africa and the eastern coasts of the Americas.
The recent comments by US President Donald Trump, vowing to take back the Panama Canal, should be seen within this context. They point to the geostrategic significance of Panama, as an essential transit route for the US navy and as a vital chokepoint for US trade. There is simply no alternative maritime route that could challenge the Panama Canal’s pre-eminence in this region. Despite all the noise and furore aimed at Panama, centred on illegal migration, high transit fees for the canal, and even a possible invasion of Panama to retake the canal, Trump’s true aim is at one target in this quagmire: China. He said as much during his inaugural speech: “And above all China is operating the Panama Canal and we didn’t give it to China, we gave it to Panama, and we’re taking it back”.
Trump’s modus operandi of shock and awe should often be taken with tablespoons of salt. China does not operate the Panama Canal. This much is clear. China also has no control or influence over the Panama Canal Authority (ACP in Spanish), the autonomous body responsible for the canal’s day-to-day operations. The ACP is a professionally run entity with a high degree of independence even from the government of Panama. It is run by 10,000 employees who are meticulously trained to ensure the smooth running of the canal. As expected, Panama’s president José Raúl Mulino rejected Trump’s claim in its entirety, adding that there is “no presence of any nation in the world that interferes with our administration”.
The real issue is the operation of the Balboa and Cristobal ports along Panama’s Pacific and Atlantic coast by Hutchison Port Holdings, a Hong Kong-based private operator that, by its own admission, is the ‘world’s leading port investor, developer, and operator.” Hutchison Port Holdings began operating both ports in 1997, and its lease was extended in 2021 for another 25 years. Moreover, the Chinese State-owned China Harbour Engineering Company won a 2018 contract to construct the canal’s fourth bridge. According to Trump, his supporters, and the recent US Senate hearing discussing the Panama Canal on January 28, 2025, Chinese influence in Panama’s ports and the contract to construct the fourth bridge over the canal violate the US-Panama Neutrality Treaty signed in 1977.
This is why Panama is the first stop on US secretary of state Marco Rubio’s first international trip. Rubio’s trip has reaffirmed an important fact: Despite all the intimidation from Washington, Panama remains a firm US ally. Speaking at a press conference after his meeting with Rubio, Panama’s president declared that he does “not feel a real threat against the treaty and much less the use of force,” adding that the sovereignty of the “canal is not negotiable”. Everything else is on the table, including control of illegal migration, intelligence on organised crime, and certainly a rollback of Panama’s overtures to China, beginning with Panama rescinding its membership of China’s Belt and Road Initiative, and an audit of Hutchison’s port operations. Panama may be the first subject of Trump’s geopolitical sabre-rattling with China, but it will certainly not be the last.
Hari Seshasayee is co-founder of Consilium Group, and visiting fellow of Observer Research Foundation. The views expressed are personal