Why Donald Trump Wants the Panama Canal Back

The Panama Canal is exclusively managed and operated by the Panama Canal Authority, a Panamanian government agency, since its transfer from U.S. control in 1999. While Chinese companies, such as Hong Kong-based CK Hutchison Holdings, operate two of the five ports near the canal’s entrances, these commercial activities do not equate to control or direct influence over the canal’s operations. Panama’s Foreign Minister, Javier Martinez-Acha, has emphasized that the canal is operated solely by Panamanians, dismissing claims of Chinese involvement.?

Despite concerns about China’s growing economic presence in Panama, including investments in infrastructure projects, the Panama Canal Authority maintains full autonomy over the canal’s administration. The canal operates under established international treaties that ensure its neutrality and open access to vessels from all nations. Therefore, assertions that China runs or influences the Panama Canal may be considered unfounded.?

However, Donald Trump disagrees.?

In December 2024, President-elect Donald Trump suggested that the United States should reclaim control over the Panama Canal, asserting that the canal was “falling into the wrong hands,” specifically referencing China.? These statements were met with strong opposition from Panamanian officials, who reaffirmed their sovereignty over the canal and denied any undue Chinese influence.?

The Panama Canal was originally constructed and operated by the United States in the early 20th century. However, growing Panamanian nationalism and demands for sovereignty led to the negotiation of the Torrijos-Carter Treaties in 1977. Signed by U.S. President Jimmy Carter and Panamanian leader Omar Torrijos, these treaties outlined the gradual transfer of control over the canal to Panama, culminating in full Panamanian administration on December 31, 1999.? This transfer was intended to recognize Panama’s sovereignty and address longstanding tensions between the two nations regarding the canal’s administration.

Chinese companies have become involved in operations near the Panama Canal primarily through port management and infrastructure projects. In 1997, Hong Kong-based Hutchison Whampoa (now CK Hutchison Holdings) secured a 25-year concession to manage the ports of Balboa and Cristóbal, located at the Pacific and Atlantic entrances of the canal, respectively. This concession was automatically renewed in 2021 for an additional 25 years, extending their management until 2047.?

The involvement of Chinese companies in these port operations is part of China’s broader strategy to expand its global trade and economic influence. By investing in critical infrastructure projects worldwide, China aims to enhance its Belt and Road Initiative, facilitating trade routes and strengthening economic ties with various countries. In Panama, Chinese firms have participated in several significant projects, including the construction of a cruise ship terminal and a natural gas-fired power plant.?

President-elect Donald Trump’s concerns about potential Chinese influence over the Panama Canal stem from the presence of Chinese companies operating in the region and the Chinese government’s ability to access data from these firms. Although the Panama Canal is managed solely by the Panama Canal Authority, a Panamanian government agency, Chinese state-owned enterprises have invested in infrastructure projects near the canal, such as ports and bridges. This has raised apprehensions about China’s strategic intentions and the possibility of the Chinese Communist Party (CCP) leveraging these assets for geopolitical advantage. It is understandable for Trump to view this as a concern, not necessarily during peacetime but in the event of a conflict or, worse, a future war. From the U.S. perspective, the involvement of CCP-linked entities in critical infrastructure could pose significant risks.

A worst-case scenario envisioned by Trump could involve the CCP exerting control over these Chinese-operated facilities to disrupt canal operations, thereby affecting global trade routes and U.S. economic interests. Furthermore, Chinese laws, such as the National Intelligence Law, require Chinese companies to cooperate with state intelligence agencies, raising concerns about data security and espionage. For instance, the CCP can compel companies to provide access to data, which could include sensitive information related to the canal’s operations.?

Panamanian authorities have consistently refuted claims of foreign control over the canal. Ricaurte Vásquez, the administrator of the Panama Canal, emphasized that the canal operates under established rules without exceptions for any country, maintaining its neutrality and sovereignty.?