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President Donald Trump has repeatedly expressed his desire to regain U.S. ownership of the Panama Canal, which the United States previously controlled until a treaty transferred full ownership to Panama in 1999. Trump’s bluntly stated desire, alongside comments he has made about acquiring Greenland, would violate the international principle of sovereignty and decades of U.S. foreign policy norms if translated into action. The canal facilitates hundreds of billions of dollars of trade each year. It is a central point for international commerce, vital to U.S. supply chains, and critical to Panama’s standing as a regional trade hub. Yet, China’s growing commercial ties to Panama and the region have fueled U.S. concerns about Beijing’s broader role in global shipping and port operations.
Why does the canal matter?
The fifty-one-mile long canal connects the Atlantic and Pacific Oceans and is a critical global maritime passageway. By allowing vessels to bypass the lengthy trip around the southernmost tip of South America, the canal significantly reduces both the time and cost of shipping. Upwards of thirteen thousand ships—representing between 5 and 6 percent of global trade—pass through the canal each year.
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The canal is vital to both the U.S. and Panamanian economies. The United States remains the canal’s biggest user, with some 40 percent of all U.S. container traffic traversing it annually. Meanwhile, revenue from the canal made up about 4 percent of Panama’s gross domestic product in 2024. Other major users of the waterway include Chile, China, Japan, and South Korea.
In 2023, canal authorities increased the fees for passing ships and limited the number that could cross each day after water levels fell to record lows amid a prolonged drought. While levels have since climbed, experts say the need remains for new investments in the canal’s water management systems as extreme weather events and other climate disruptions increasingly challenge global supply chains.
Why does Trump want to retake control of the canal?
Trump has accused Panama of charging U.S. ships exorbitant rates to transit the canal, which he said was “foolishly” given away by President Jimmy Carter as part of the Torrijos-Carter Treaties signed with Panama in 1977. Trump has also alleged that China secretly runs the canal and said he would not rule out using U.S. military force to retake control.
“Trump seems to be making an example out of Panama with the goal of getting other regional leaders to think twice before they take any bold steps to deepen ties with Beijing,” said Will Freeman, CFR fellow for Latin America Studies.
Does China control the canal?
There is no evidence that the Chinese government controls the canal. However, a subsidiary of CK Hutchison Holdings, a Hong Kong-based conglomerate and one of the world’s leading container terminal operators, has managed two ports—at Balboa on the Pacific coast and at Cristóbal on the Atlantic coast—since 1997. Some experts say this raises concerns about potential Chinese influence over the ports, as Beijing’s national security laws now extend to Hong Kong.
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Former Republican Senator Marco Rubio, now Trump’s secretary of state, has criticized Chinese influence over the canal. In his Senate confirmation hearing, he said that Beijing, through the expansion of Chinese-owned companies, has “the ability to turn the canal into a choke point in a moment of conflict,” which is “a direct threat to the interests and the national security of the United States.”
Over the past two decades, China has developed close economic ties with many Latin American countries. Beijing is currently South America’s top trading partner and a major source of foreign direct investment and energy and infrastructure lending, including through its Belt and Road Initiative—of which Panama is a member. China has also been involved in several infrastructure projects in Panama, including the construction of a cruise-ship terminal and a convention center.
What is the United States’ history with the canal?
The United States gained the right to construct the artificial waterway in 1903 after backing Panama’s bid to break away from Colombia, and the canal officially opened to traffic in 1914. The United States owned and operated the canal until 1977, when Carter negotiated the canal treaties amid Panama City’s growing demands for sovereignty and Carter’s desire for better relations with Latin America. The Torrijos-Carter Treaties established joint U.S.-Panamanian authority over the canal until 1999, at which point the United States relinquished full control of the canal to the Panama Canal Authority, an autonomous government agency of Panama.
However, the transfer of ownership was controversial. Some lawmakers staunchly opposed relinquishing U.S. control, saying the decision diminished U.S. influence in the region. In his 1976 campaign to become the Republican Party’s presidential candidate, Ronald Reagan argued that the United States was the “rightful owner” of the canal. Additionally, many policymakers saw the canal as essential for ensuring uninterrupted access to global shipping routes and believed maintaining control was necessary to safeguard U.S. economic interests abroad.
Under the treaties, the United States has the right to act if there’s a military threat to the canal’s neutrality, but that doesn’t enable Washington to unilaterally reassume ownership—and experts say doing so would violate international law. Today, many experts see the treaties as having heralded a new era of U.S.-Latin America relations.
How has Panama responded?
Panamanian President José Raúl Mulino swiftly rebuked Trump’s comments, asserting that “there’s no possibility of opening any kind of conversation around [transferring canal ownership]” and denying any Chinese involvement in the canal’s operations. He also added that shipping fees are calculated the same way for every vessel that traverses the canal. Mulino, who has pledged greater cooperation with the United States, reiterated his position after Trump again mentioned regaining control of the waterway in his inaugural address.
Michael Bricknell and Will Merrow created the graphics for this In Brief.