The Panama Canal has long been a vital artery for global trade, dramatically shortening maritime routes between the Atlantic and Pacific Oceans. Built by the United States and operated for much of its existence under American control, the canal was transferred to Panama in 1999. But recently, it has become the focus of fresh geopolitical rhetoric, with the Trump administration voicing concerns about its management and raising the possibility of renewed U.S. involvement. So, why is this century-old waterway back in the spotlight?
A Brief History of the Panama Canal
The idea of a canal cutting across the Isthmus of Panama dates back to the 1500s when Spanish explorers first envisioned a passage between the oceans. Fast forward a few centuries, and the French, led by Ferdinand de Lesseps (the same engineer behind the Suez Canal), attempted to construct one in the late 1800s. However, the project was plagued by engineering miscalculations, disease outbreaks, and financial troubles, ultimately ending in failure.
Recognizing its strategic value, the United States took over the project in the early 1900s. In 1903, the U.S. played a key role in Panama’s independence from Colombia, paving the way for a treaty that allowed it to build and operate the canal. Construction was completed in 1914, and the canal quickly became a linchpin of global commerce and military strategy. The U.S. controlled it for much of the 20th century, but growing Panamanian nationalism led to negotiations that culminated in the 1977 Torrijos-Carter Treaties. These agreements set the stage for Panama to take full control by December 31, 1999.
Why Is the U.S. Interested in the Canal Again?
The Trump administration has reignited discussions about the Panama Canal, citing two key concerns: rising transit costs for American companies and increasing Chinese influence in Panama’s infrastructure.
Economic Concerns
Since taking over canal operations, Panama has significantly increased transit fees, citing growing maintenance costs and a recent $5 billion expansion that allows larger ships to pass through. For U.S. shipping companies, these higher fees are cutting into profits, leading to complaints that Panama’s management is pricing out American businesses. Trump and his supporters argue that, given the historical U.S. investment in the canal, America should have greater influence over pricing and operations.
China’s Growing Influence
Perhaps more pressing for Washington is China’s economic footprint in Panama. Chinese companies, such as CK Hutchison Holdings, manage ports at both ends of the canal, and China has been pouring billions into infrastructure projects across the country. While the canal itself remains under Panamanian control, Beijing’s investments in logistics, energy, and port facilities around it have raised alarms in Washington. Some U.S. policymakers fear that China’s presence could undermine the canal’s neutrality and give Beijing undue sway over a passage critical to American trade and military mobility.
Marco Rubio’s Role in the Debate
Secretary of State Marco Rubio has taken a vocal stance on the issue, warning of potential consequences if Panama does not reduce China’s influence near the canal. During a recent diplomatic visit to Panama, Rubio met with President José Raúl Mulino and urged the country to reconsider its partnerships with Chinese companies. He has publicly stated that allowing China to strengthen its foothold near such a crucial trade route could have long-term security risks for the U.S. and its allies. Rubio has also suggested that Washington should explore ways to reassert influence over the canal, whether through economic pressure or diplomatic negotiations.
Panama’s Response
Panama has made it clear that it has no intention of renegotiating control of the canal. President José Raúl Mulino has repeatedly affirmed the country’s sovereignty over the waterway, rejecting the notion that outside powers should dictate its operations. However, he has acknowledged U.S. concerns and recently announced that Panama will not renew agreements related to China’s Belt and Road Initiative—signaling a possible recalibration of its international partnerships.
Despite this, there’s little indication that Panama is willing to alter the canal’s management structure or fee system. Officials argue that the current model ensures neutrality and that any attempt by the U.S. to reclaim influence would be met with strong resistance.
The Bigger Geopolitical Picture
The renewed U.S. focus on the canal is part of a larger pattern of tensions between Washington and Beijing. Across Latin America, China has been investing heavily in infrastructure, natural resources, and trade partnerships, positioning itself as a dominant economic force in the region. The Trump administration, and many in Washington, see this as a strategic challenge and are looking for ways to push back.
The Panama Canal represents a critical flashpoint in this broader struggle. While the chances of the U.S. reclaiming control remain slim, expect continued diplomatic pressure, economic negotiations, and strategic maneuvering as Washington looks to counter China’s influence in the region.
The Panama Canal’s history is deeply intertwined with American interests, and its current role in global trade keeps it at the heart of economic and geopolitical discussions. The Trump administration’s renewed focus on the canal reflects broader concerns about trade, economic leverage, and China’s growing presence in Latin America. But for now, Panama remains firmly in charge, and any shift in control would require more than just rhetoric—it would demand serious diplomatic and economic efforts that may not be easy to achieve.