In a bold statement on Truth Social, President-elect Donald Trump demanded Panama reduce the “exorbitant” transit fees imposed on U.S. ships using the Panama Canal or return the canal to U.S. control.
Trump expressed his frustration over the current pricing structure, stating that the rates are “ridiculous” given the historical contributions of the United States to Panama. He described the situation as a “complete rip-off” and vowed immediate action to address it.
The Panama Canal: A Vital Trade Route for the U.S.
The Panama Canal, a 51-mile (82-kilometer) engineering marvel completed by the United States in 1914, remains a critical trade passage. As the canal’s largest customer, the U.S. accounts for approximately 75% of the cargo transiting through annually. However, a recent drought has strained its operations, creating supply-chain bottlenecks that experts believe have contributed to inflationary pressures.
National Economic Council Director Lael Brainard highlighted the canal’s disruptions as a factor exacerbating global supply-chain issues. Meanwhile, the Panama Canal Authority reported a $2.47 billion contribution to Panama’s treasury in fiscal 2024, marking its second consecutive annual decline.
Trump Challenges Historical Treaty
In his post, Trump revisited the controversial 1977 treaty signed by former President Jimmy Carter, which handed control of the canal back to Panama in 1999. Calling the decision “foolish,” Trump suggested that the canal might now be at risk of falling under Chinese influence.
“The canal isn’t China’s to manage,” Trump stated, pointing to a Hong Kong-based Chinese company’s control over two of the five ports near the canal. As China stands as the canal’s second-largest customer, Trump emphasized that the canal’s original purpose was to strengthen U.S.-Panama cooperation.
“If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, then we will demand that the Panama Canal be returned to us, in full, and without question,” he warned.
Panama’s Response Pending
The Panamanian government and the Panama Canal Authority have yet to issue formal responses to Trump’s statements. A Panamanian official acknowledged awareness of the remarks and indicated that a detailed reply would follow soon.
As tensions rise, this development could have significant implications for global trade and U.S.-Panama relations. Industry experts and political analysts are closely monitoring the situation for potential ripple effects on international commerce and diplomatic ties.
Key Takeaways:
- Trump demands lower transit fees or the return of the Panama Canal.
- The U.S. accounts for 75% of the canal’s traffic, highlighting its strategic importance.
- Recent droughts and supply-chain issues add urgency to addressing canal operations.
- Trump criticizes past treaties and raises concerns about potential Chinese influence.
- Panama’s formal response is expected shortly.
Stay tuned for updates on this evolving story and its impact on global trade and diplomacy.