By Edward Hunt
February 12, 2025
Source: Foreign Policy in Focus
Panama Canal | Image credit: Michael D. Camphin
The United States is threatening to take over the Panama Canal at a time when Panama is struggling to address growing challenges from climate change, the greatest long-term threat to the canal’s future.
Although President Donald Trump complains about Panama overcharging U.S. businesses and falsely claims that China controls the canal, Panama is taking steps to prepare for future droughts that may limit the canal’s operations. Not only did a severe drought lead to the higher shipping costs that have so rankled Trump, but Panama’s efforts to make the canal more resilient may take years to complete.
“It takes time, and there will at least be one more incident of severe limitations before that occurs,” Daniel Maffei, a commissioner of the Federal Maritime Commission, told Congress last month, referring to future restrictions on the canal. That is “unless we get really, really lucky, and there could be more than that.”
The Panama Canal is a critical transit route for the global economy. Formerly under U.S. control, until the United States formally transferred it to Panama on the last day of 1999, the canal facilitates shipping between the Atlantic and Pacific Oceans. The greatest beneficiary remains the United States, which is the origin or destination of 75 percent of the canal’s cargo.
In recent years, the canal has been handling larger vessels, having completed an expansion in 2016, but it has faced growing challenges from climate change. A severe drought in 2019 affected the canal’s operations, and a far worse drought that began in late 2022 and continued into early 2024 forced canal operators to make major adjustments.
With less water available for the canal’s locks, canal operators reduced the number of ships moving through the canal. They also increased tolls, which ensured that Panama could maintain revenue for paying its bills and raise additional funds for projects to make the canal more resilient.
U.S. businesses complained about the price increases, but U.S. officials believed that Panama managed the drought well. When commissioners from the Federal Maritime Commission met with Panamanian officials in August 2024, they expressed confidence in Panama’s management. Late last year, then-U.S. Ambassador to Panama Mari Carmen Aponte told a student newspaper that “the Panamanians are doing a fabulous job of administering that canal, even in challenging times, such as climate change and lack of water.”
It was only after Trump brought the Panama Canal into the public spotlight after the presidential election that officials in Washington became highly critical. Trump accused Panama of ripping off the United States and threatened to take over the canal. He falsely accused China of operating the canal.
During his inaugural address, Trump raised the stakes by pledging that “we’re taking it back.” He reinforced his threat by identifying the United States as “a growing nation” that “expands our territories” and “carries our flag” into other parts of the world.
Officials in the Trump administration have backed the president’s reasoning. Mauricio Claver-Carone, Trump’s special envoy for Latin America, dismissed Panamanian concerns about climate change, calling them “B.S.” Secretary of State Marco Rubio, who visited Panama earlier this month, insisted that the threat from China is real.
The Trump administration is not being honest, however. China doesn’t control the Panama Canal, and last year’s price increases stemmed from Panama’s market response to climate change, not some random attempt by Panama to rip off the United States. The country raised much of its additional revenue by auctioning more transit slots to businesses that were willing to pay more to use the canal during the drought.
During a January 28 congressional hearing, U.S. regulators from the Federal Maritime Commission provided some clarity on these matters, even while making strained efforts not to contradict Trump. One of their key points was that the Panama Canal Authority administers the canal, not China. Although they expressed concerns about Hutchison Ports, a Hong Kong firm that owns two ports near the Panama Canal and a total of 53 ports around the world, they denied that China controls the canal.
“It’s not like these two ports control the entrance to the canal,” Maffei said. “That is the Canal Authority that does control that.”
In fact, the regulators repeatedly praised the Panama Canal Authority for how it has administered the canal. Even while making strong criticisms of the Panamanian government, which they accused of corruption, they characterized the Panama Canal Authority as an independent organization that has effectively managed the canal.
Louis Sola, the chair of the Federal Maritime Commission, noted in his written statement to Congress that for decades the canal “has been very ably administered” by the Panama Canal Authority. He told congressional leaders that the organization is “a model of public infrastructure management” and insisted that it has “done a fantastic job.”
When addressing last year’s price increases, the regulators said nothing about Panama trying to rip off the United States. They expressed concerns about costs to U.S. businesses, even warning that prices could rise again if drought conditions resumed, but they insisted that the Panamanians simply implemented a market response to environmental challenges.
“They’re providing fewer transits and at the same time they’re making more money because of a market mechanism,” Maffei said. “This is capitalist.”
One of Trump’s assumptions is that the United States can manage the canal more effectively, but the United States would face major difficulties. Not only would it experience backlash from the Panamanian people, who have resisted U.S. imperialism in the past, but it would inherit all the challenges that Panama is facing, including the necessity of preparing for threats from climate change.
If Trump acts on his imperial delusions, then he may very well initiate an imperial nightmare. A U.S. takeover would create political turmoil in Panama, exacerbate the environmental problems that Panama is facing, and very likely expose both Panama and the United States to greater risk in the years ahead.
In short, Trump’s threats to take over the Panama Canal are rooted in dangerous delusions that may lead to political and environmental catastrophe.
The United States is threatening to take over the Panama Canal at a time when Panama is struggling to address growing challenges from climate change, the greatest long-term threat to the canal’s future.
Although President Donald Trump complains about Panama overcharging U.S. businesses and falsely claims that China controls the canal, Panama is taking steps to prepare for future droughts that may limit the canal’s operations. Not only did a severe drought lead to the higher shipping costs that have so rankled Trump, but Panama’s efforts to make the canal more resilient may take years to complete.
“It takes time, and there will at least be one more incident of severe limitations before that occurs,” Daniel Maffei, a commissioner of the Federal Maritime Commission, told Congress last month, referring to future restrictions on the canal. That is “unless we get really, really lucky, and there could be more than that.”
The Panama Canal is a critical transit route for the global economy. Formerly under U.S. control, until the United States formally transferred it to Panama on the last day of 1999, the canal facilitates shipping between the Atlantic and Pacific Oceans. The greatest beneficiary remains the United States, which is the origin or destination of 75 percent of the canal’s cargo.
In recent years, the canal has been handling larger vessels, having completed an expansion in 2016, but it has faced growing challenges from climate change. A severe drought in 2019 affected the canal’s operations, and a far worse drought that began in late 2022 and continued into early 2024 forced canal operators to make major adjustments.
With less water available for the canal’s locks, canal operators reduced the number of ships moving through the canal. They also increased tolls, which ensured that Panama could maintain revenue for paying its bills and raise additional funds for projects to make the canal more resilient.
U.S. businesses complained about the price increases, but U.S. officials believed that Panama managed the drought well. When commissioners from the Federal Maritime Commission met with Panamanian officials in August 2024, they expressed confidence in Panama’s management. Late last year, then-U.S. Ambassador to Panama Mari Carmen Aponte told a student newspaper that “the Panamanians are doing a fabulous job of administering that canal, even in challenging times, such as climate change and lack of water.”
It was only after Trump brought the Panama Canal into the public spotlight after the presidential election that officials in Washington became highly critical. Trump accused Panama of ripping off the United States and threatened to take over the canal. He falsely accused China of operating the canal.
During his inaugural address, Trump raised the stakes by pledging that “we’re taking it back.” He reinforced his threat by identifying the United States as “a growing nation” that “expands our territories” and “carries our flag” into other parts of the world.
Officials in the Trump administration have backed the president’s reasoning. Mauricio Claver-Carone, Trump’s special envoy for Latin America, dismissed Panamanian concerns about climate change, calling them “B.S.” Secretary of State Marco Rubio, who visited Panama earlier this month, insisted that the threat from China is real.
The Trump administration is not being honest, however. China doesn’t control the Panama Canal, and last year’s price increases stemmed from Panama’s market response to climate change, not some random attempt by Panama to rip off the United States. The country raised much of its additional revenue by auctioning more transit slots to businesses that were willing to pay more to use the canal during the drought.
During a January 28 congressional hearing, U.S. regulators from the Federal Maritime Commission provided some clarity on these matters, even while making strained efforts not to contradict Trump. One of their key points was that the Panama Canal Authority administers the canal, not China. Although they expressed concerns about Hutchison Ports, a Hong Kong firm that owns two ports near the Panama Canal and a total of 53 ports around the world, they denied that China controls the canal.
“It’s not like these two ports control the entrance to the canal,” Maffei said. “That is the Canal Authority that does control that.”
In fact, the regulators repeatedly praised the Panama Canal Authority for how it has administered the canal. Even while making strong criticisms of the Panamanian government, which they accused of corruption, they characterized the Panama Canal Authority as an independent organization that has effectively managed the canal.
Louis Sola, the chair of the Federal Maritime Commission, noted in his written statement to Congress that for decades the canal “has been very ably administered” by the Panama Canal Authority. He told congressional leaders that the organization is “a model of public infrastructure management” and insisted that it has “done a fantastic job.”
When addressing last year’s price increases, the regulators said nothing about Panama trying to rip off the United States. They expressed concerns about costs to U.S. businesses, even warning that prices could rise again if drought conditions resumed, but they insisted that the Panamanians simply implemented a market response to environmental challenges.
“They’re providing fewer transits and at the same time they’re making more money because of a market mechanism,” Maffei said. “This is capitalist.”
One of Trump’s assumptions is that the United States can manage the canal more effectively, but the United States would face major difficulties. Not only would it experience backlash from the Panamanian people, who have resisted U.S. imperialism in the past, but it would inherit all the challenges that Panama is facing, including the necessity of preparing for threats from climate change.
If Trump acts on his imperial delusions, then he may very well initiate an imperial nightmare. A U.S. takeover would create political turmoil in Panama, exacerbate the environmental problems that Panama is facing, and very likely expose both Panama and the United States to greater risk in the years ahead.
In short, Trump’s threats to take over the Panama Canal are rooted in dangerous delusions that may lead to political and environmental catastrophe.
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