Honestly, walking through the streets of Panama City right now feels like stepping into a masterclass on national pride. It’s early 2026, and the tropical heat isn’t the only thing simmering. The country is officially celebrating a massive milestone. On paper, it's the silver jubilee. Panama marks 25th anniversary of canal handover, a moment that was supposed to be purely celebratory. But instead of just fireworks and parades, there’s this heavy cloud of geopolitical tension hanging over the Isthmus.
Why? Well, because Donald Trump hasn’t exactly been quiet about his thoughts on the waterway.
You’ve probably seen the headlines or the Truth Social posts. The rhetoric coming out of Washington—or at least from the Mar-a-Lago wing of it—has been blunt. Trump has called the 1999 handover a "rip-off" and "foolish." He’s even floated the idea of "taking it back." It’s the kind of talk that makes diplomats spill their coffee and sends historians scrambling for their treaty books. Yet, here we are. Panama is standing its ground, waving its flag, and reminding the world that the "Bridge of the World" isn't up for repossession.
A Bitter Sweet Celebration Under the Shadow of Threats
The actual anniversary ceremony was held at the Panama Canal Authority’s headquarters, right at the foot of Ancón Hill. It’s a spot loaded with meaning. For nearly a century, that hill was part of the "Canal Zone," a U.S. enclave where Panamanian laws didn't apply. Imagine a foreign power running a ten-mile wide strip through the middle of your country. That was the reality until December 31, 1999.
President José Raúl Mulino led the events, and he didn't mince words, though he was careful not to turn it into a Twitter feud. He called the canal "the heart of our sovereignty." He spoke about how the waterway belongs to the Panamanian people "forever." It was a clear, if indirect, rebuttal to the threats coming from the north.
There was also a really touching, somber note to the day. The celebrations happened just after the passing of former U.S. President Jimmy Carter. People here remember him differently than they do in Georgia. To Panamanians, Carter is the man who had the "vision and nobility" to sign the Torrijos-Carter Treaties in 1977. Without him, the 1999 handover probably wouldn't have happened—at least not peacefully. A moment of silence was held for him. It felt like the end of an era, especially with the new era of "reclaim and retake" rhetoric starting to heat up.
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The "Take Back" Rhetoric: Real Threat or Just Posturing?
Let’s talk about these threats. Trump’s argument basically boils down to two things: money and China.
He’s been complaining about the "exorbitant" fees Panama charges for ships to pass through. He’s also been pushing this narrative that China is secretly—or "lovingly," as he put it—running the show.
Is there any truth to it? Kinda, but it's complicated.
- The Fees: Yes, they’ve gone up. But that’s mostly because of the massive 2023-2024 drought that forced the Canal Authority to limit traffic. When you have less "product" (water), the price goes up. It’s basic economics, not a conspiracy to rob American shippers.
- The China Factor: A Chinese company does operate ports at both ends of the canal. But the canal itself? That’s run by the ACP (Autoridad del Canal de Panamá), which is constitutionally autonomous.
Mulino has been very clear: "There are no Chinese soldiers in the canal, for the love of God."
The Engineering Feat That Changed Everything
You can't talk about the 25th anniversary without acknowledging how much the canal has changed since 2000. Many skeptics in the U.S. back in the 90s said Panama couldn't run it. They thought it would fall into disrepair or become a hotbed of corruption.
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They were wrong.
Since the handover, Panama has actually managed the canal better than the U.S. did in its final years. They pulled off a massive $5.2 billion expansion in 2016, adding a third set of locks to handle the "Neo-Panamax" ships—those absolute giants that carry over 14,000 containers.
The canal now generates about 6% of Panama's GDP. Since the year 2000, it has pumped roughly $28 billion into the national treasury. Under U.S. control, it was run as a non-profit "utility" for the U.S. Navy and trade. Now, it’s a business. A very profitable one.
The Ghost of the 1964 Martyrs
During the anniversary, there was a march to honor the "Martyrs of 1964." If you want to understand why Panamanians get so fired up about the canal, you have to know this story.
Back in '64, Panamanian students tried to fly their flag next to the U.S. flag at a high school in the Canal Zone. It turned into a riot. Over 20 Panamanians were killed. That event is basically the "Alamo" of Panamanian independence. It’s why any talk of a U.S. "return" is met with such visceral anger. For people here, the canal isn't just a ditch with water; it's a symbol of a long, bloody struggle for dignity.
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What’s Actually at Stake?
If the U.S. actually tried to "reclaim" the canal, it wouldn't just be a diplomatic spat. It would be a mess.
- Legal Hurdles: The Neutrality Treaty doesn't have a "take back" clause. It says the U.S. can intervene to keep it open, but not to run it.
- Economic Chaos: Any instability at the canal freaks out global markets. 5% of all global trade passes through here.
- Regional Relations: An unprovoked move on Panama would alienate every single ally in Latin America. It would essentially hand the region to China on a silver platter.
Where Do We Go From Here?
As Panama marks 25th anniversary of canal handover, the real challenge isn't actually Trump—it's water.
Climate change is hitting the isthmus hard. The canal needs fresh water from Gatun Lake to operate its locks. No water, no transit. The Canal Authority is currently looking at a $1.6 billion project to dam the Indio River and pipe water into the canal system. It’s a massive undertaking that will involve relocating communities.
That’s the "war" Panama is actually fighting.
Actionable Insights for the Future:
If you’re a business owner or someone following global trade, here is what you need to watch over the next 12 months:
- Monitor Draft Restrictions: Keep an eye on the official Panama Canal Authority (ACP) advisories. If the dry season is particularly harsh, draft limits will drop, meaning ships have to carry less cargo, which drives up shipping costs.
- Watch the "Indio River" Project: The progress of this new reservoir is the single biggest indicator of the canal's long-term viability. If it gets bogged down in protests or red tape, expect canal fees to stay high.
- Geopolitical Hedging: Shippers are already looking at the "Interoceanic Corridor" in Mexico (a rail link) as a backup. It’s worth investigating alternative routes if you rely on just-in-time delivery through the isthmus.
- Diplomatic Tone: Watch the rhetoric from the U.S. State Department versus the White House. Often, the career diplomats are working to smooth over the "take back" comments to ensure operational cooperation continues.
The next few years are going to be a wild ride for the Panama Canal. Between the threats from D.C. and the drying lakes of the interior, the 25th anniversary isn't just a look back—it’s the start of a very tense new chapter.