Donald Trump has long been fixated on the Panama Canal, a crucial shipping route between the Pacific and Atlantic oceans. He has railed against rising tolls on American ships (though the increases apply to all vessels), falsely claimed that Panama has handed control to Chinese soldiers and even suggested that he wouldn’t rule out U.S. military action to reclaim it.
It was even part of a Christmas Day message on his Truth Social site. “Merry Christmas to all, including to the wonderful soldiers of China, who are lovingly, but illegally, operating the Panama Canal,” he wrote.
He brought it up again during his inauguration speech.
The issue is expected to resurface as Secretary of State Marco Rubio visits Panama this weekend on his first international trip in his new role.
On Thursday, Panamanian President José Raúl Mulino, who has denied any Chinese control of the canal, firmly stated that its status is nonnegotiable.
What makes the Panama Canal so important?
Before the creation of the Panama Canal, ships had to sail around Cape Horn, the southernmost tip of South America, to travel between the Pacific and Atlantic oceans, a journey that could take months.
Today, it would take 27 days for a ship to travel from New York to San Francisco by going around Cape Horn — but just under 11 days if it uses the Panama Canal.
Europeans eyed Panama’s 50-mile-wide isthmus as a prime shipping shortcut as early as the 16th century.
The United States took over canal construction from the French in the early 1900s, completing it in 1914. For more than 60 years, it controlled both the canal and the surrounding Canal Zone, establishing numerous military bases.
Over time, U.S. control of the canal and its military presence led to growing resentment among Panamanians. Deadly riots in 1964 further strained diplomatic ties and fueled concerns over the continued presence of American troops. In 1977, President Jimmy Carter signed two treaties: one granting Panama eventual control of the canal, the other ensuring it remained open to all nations.
Panama gained full control of the canal in 1999. Today, the independent Panama Canal Authority manages its operations, including the locks that raise and lower ships. While much of the canal’s original infrastructure remains intact, expansions — including new locks, bridges and dams — have been added to accommodate growing maritime traffic.
The canal is flanked by ports on both sides, with two operated by Chinese companies and one each by American, Taiwanese and Singaporean firms.
The U.S. shipping industry is by far the canal’s top user
Although the canal serves shipping companies worldwide, American firms remain its biggest users. In fiscal 2024, ports in the United States handled the highest number of cargo ships passing through the waterway. It also leads in intercoastal traffic — cargo transported between its own coasts via the canal.
What is China’s presence like?
Trump is not alone in his concerns over the Chinese presence near the canal. Many Republicans and some Democrats on Capitol Hill share his fears about China’s growing influence, citing Chinese companies managing ports on either side of the canal and building a bridge.
“The partially completed bridge gives China the ability to block the canal without warning,” said Sen. Ted Cruz (R-Texas) this week during a Senate committee hearing on the canal’s impact on trade and security. “And the ports give China ready observation posts to time that action.”
Since 1997, Hutchison Port Holdings, a China-based company, has managed and operated ports at both entrances. On the Atlantic side, the port of Cristobal is run by Hutchison, while Manzanillo International Terminal is operated by a U.S. company and Colón Container Terminal by a Taiwanese shipping firm.
On the Pacific side, Hutchison operates the port of Balboa, the largest along the canal. Across from Balboa, PSA Panama International Terminal is run by a Singapore-based company.
But operating a port is not the same thing as controlling the canal.
John Feeley, a retired U.S. ambassador to Panama, said the threat is overstated. “Operating a port on the canal does not give a company the physical ability to block the canal,” he said. He added that companies do not own the ports; they are granted concessions by the Panama Canal Authority to manage them.
Federal Maritime Commission Chairman Louis E. Sola reiterated during the hearing that “the canal is managed by the Panama Canal Authority.”
For its part, Beijing has denied controlling or interfering in the affairs of the canal, but experts said China is increasing its footprint in the region.
“China has been on a full-court press to increase its influence across the area,” said Jason Marczak, vice president and senior director at the Atlantic Council’s Adrienne Arsht Latin America Center. “Whether that’s around the ports, building bridges, or in soft power and the diplomatic engagement the Chinese have in the region.”
U.S. lawmakers and officials have noted that the Panama Canal is one of many places around the globe that points to Beijing’s expanding competitive influence, driven by its Belt and Road Initiative, and alleged “gray zone” tactics that mask military expansion under the guise of commercial activity, The Washington Post previously reported.
Shipping tolls have increased for all traffic going through the canal
Marczak told The Post that while U.S.-based shipping companies do not face discriminatory tariffs for using the canal, charges have increased for all commercial ships in recent years, in part due to the canal’s reduced water level, which meant fewer vessels could use it each day.
During periods of reduced traffic, U.S. ships have had to pay the higher auction prices for preferred canal entry slots. (Fees are set and regularly reviewed by the Canal Authority, and are based on size and weight of vessels. They are openly published.)
Marczak said the increased charges, which are not specific to the United States, could be why Trump is concerned about a surge in tariffs.
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Map sources: Panama Canal Authority, Maritime Authority of Panama, Geospatial Portal of Panama, GeorgiaTech Panama, U.S. Dept. of State, World Bank, Library of Congress, STRI GIS Data Portal and OpenStreetMap.
