Trump Demands Panama Lower Transit Fees or Return Canal to the US

President-elect Donald Trump said Saturday that the Panama Canal is charging “exorbitant prices and rates of passage” on US naval and merchant ships, and he demanded that fees be lowered or else Panama should return the canal to the US. “The fees being charged by Panama are ridiculous, especially knowing the extraordinary generosity that has been bestowed to Panama by the US,” Trump said in a post on his Truth Social platform. “This complete ‘rip-off’ of our Country will immediately stop.”  The US is the canal’s biggest customer, responsible for about three quarters of the cargo transiting through each year.

A prolonged drought, however, has hampered the canal’s ability to move ships between the Atlantic and Pacific oceans recently. National Economic Council Director Lael Brainard said last week that the resulting disruptions contributed to the supply-chain pressures that have boosted inflation.  The Panama Canal Authority said Friday that the canal contributed $2.47 billion to Panama’s treasury in fiscal 2024, the second consecutive annual decline.  The US completed the 51-mile (82-kilometer) canal through the Central American isthmus in 1914, but ceded it back to Panama in 1999 under a treaty signed by former President Jimmy Carter in 1977 — a move that Ronald Reagan vehemently opposed, and Donald Trump called foolish.

Trump suggested that the canal was in danger of falling into the wrong hands, saying the canal isn’t China’s to manage. China is its second-biggest customer. A Chinese company based in Hong Kong controls two of the five ports adjacent to the canal, one on each side.  “It was not given for the benefit of others, but merely as a token of cooperation with us and Panama,” Trump said. “It was solely for Panama to manage, not China, or anyone else,” Trump said. “We would and will NEVER let it fall into the wrong hands!”  He continued that if Panama could not ensure “the secure, efficient and reliable operation” of the channel, “then we will demand that the Panama Canal be returned to us, in full, and without question.” “If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, this note to the Officials of Panama………Please be guided accordingly!” 

The Panamanian embassy in Washington didn’t immediately return a request for comment. An official for Panama’s government said late Saturday that he was aware of Trump’s statement and there would be a formal response in the next day or so. A spokesman for the canal declined to comment until the government had responded.  The United States Embassy in Panama issued a statement regarding recent statements by the president-elect of the North American nation, Donald Trump, who expressed his intention to reclaim the Panama Canal if historic agreements are not respected.  “Panama is a key partner for the United States. We work together to promote inclusive and sustainable economic development”. An estimated five percent of global maritime traffic passes through the Panama Canal, which allows ships traveling between Asia and the US East Coast to avoid the long, hazardous route around the southern tip of South America.  The main users of the passage are the United States, China, Japan and South Korea.