Escalating Drama Over the Panama Canal
Drama over the Panama Canal is escalating.
In his inauguration speech, President Trump spent a minute or two talking about the Panama Canal. He finished that portion of the speech with the dramatic declaration, “… we’re taking it back.” Two weeks ago, I published in Universal Cargo’s blog transcripts of everything President Trump said about the Panama Canal in both his inaugural speech and his pre-inauguration press conference at Mar-a-Lago.
Ultimately, Trump made the claims that Panama violated the treaty in which President Jimmy Carter ceded control of the canal to Panama, is overcharging American ships, is treating them badly, and that China is operating the Panama Canal. For those reasons, President Trump said we would take back control of the Panama Canal.
The question quickly became whether President Trump really meant to take control away of the Panama Canal from Panama or if the declaration was a negotiating tactic to get what he wanted out of Panama. Since retaking the office of president, we’ve seen Trump use tariff threats on Canada and Mexico to negotiate border security from the countries. But at the same time, we’ve seen him follow through with tariffs on China. He’s also made statements about potentially enormous moves like buying Greenland and the U.S. taking over the Gaza Strip.
Sometimes, it seems like President Trump is willing to publicly speak unfiltered ideas that he gets. However, his statements appear more calculated than that. They are more like far end asks or demands to give plenty of space to negotiate down to agreement points he wants., And Donald Trump was known as a negotiator for decades before becoming “Negotiator in Chief” of the United States.
What really made talk of taking back the Panama Canal sound like a negotiating tactic was the Department of State tweeting on X that “The government of Panama has agreed to no longer charge fees for U.S. government vessels to transit the Panama Canal. This saves the U.S. millions of dollars a year.”
For a moment, it seemed the Trump Administration made a deal regarding the canal, and the drama over controlling it might be over. Nope. Things were just heating up.
On the same Wednesday the Department of State made its post about the Panama agreeing not to charge U.S. government vessels, the Panama Canal Authority denied any such deal was made. Alma Solís reported in an Associated Press (AP) article:
The Panama Canal Authority put out its own terse statement later Wednesday night saying it had “not made any adjustments” to the fees.
Denials of the deal came right from Panamanian President José Raúl Mulino the next day, according to Solís’s article:
Mulino said he had told U.S. Secretary of Defense Pete Hegseth on Wednesday that he could neither set the fees to transit the canal nor exempt anyone from them and that he was surprised by the U.S. State Department’s statement suggesting otherwise late Wednesday.
“I completely reject that statement yesterday,” Mulino said during his weekly press conference, adding that he had asked Panama’s ambassador in Washington to dispute the State Department’s statement. He was scheduled to speak with U.S. President Donald Trump on Friday.
Was there miscommunication? Did someone at the State Department think a deal was reached that wasn’t? Did someone in Panama’s government make an unauthorized agreement? Did the government initially make this agreement and go back on it? It’s impossible to know exactly what happened. Only that the State Department put this statement out there and the Panamanian government denied it.
It was a fast up and down on the negotiation situation around the Panama Canal, but it didn’t end there.
Last week, right after a meeting with new U.S. Secretary of State, Marc Rubio, Panama’s president announced it won’t be renewing its participation in China’s giant infrastructure initiative it has been advancing in countries around the globe for close to a decade. An Economic Times article reports:
Panama will not renew its participation in China’s Belt and Road Initiative (BRI), President José Raúl Mulino announced after a meeting with US Secretary of State Marco Rubio. The decision makes Panama the first Latin American country to withdraw from the global infrastructure initiative.
A broad agreement between Panama and China to contribute to China’s Belt and Road initiative, under which the Asian country expanded investment in Panama during previous administrations, will not be renewed, Mulino said as per a Reuters report.
With this turn of events, the drama got ratcheted up even higher as, obviously, it made China angry. Rishika Singh reported in The Indian Express:
China’s Assistant Foreign Minister Zhao Zhiyuan on Friday (February 7) summoned Panama’s Ambassador to China to lodge “solemn representations” over its decision to not renew the Memorandum of Understanding on the Belt and Road Initiative (BRI).
At a press briefing, a Chinese Foreign Ministry spokesperson also said the country “firmly opposes the United States using pressure and coercion to smear and undermine Belt and Road cooperation,” adding, “The US side’s attacks… once again expose its hegemonic nature.”
Ultimately, this adds one more layer of tension between the U.S. and China, as the trade war between the countries is seeing escalation with President Trump back in office. You might think seeing Panama choose not to continue with China’s BRI might be what President Trump wanted from Panama and be enough to end the drama over the Panama Canal. It’s possible, but somehow I don’t think we’ve heard the last about fees on American government ships traversing the canal…
President Trump and his administration aren’t likely done with the negotiations. And you can’t completely rule out an attempt to reclaim control of the Panama Canal, as the things President Trump says can never be ruled out as purely negotiating tactics. His willingness to follow through on things is part of what makes statements like we’re taking the Panama Canal back effective.
