Ever feel like history is just one giant loop? We’re back at it again. This time, it's the Panama Canal. For most people, the "Big Ditch" was a settled chapter of American history, tucked away in the 1990s alongside VHS tapes and dial-up internet. But lately, Donald Trump has been making a lot of noise about it. He wants it back. Honestly, the rhetoric isn't just a campaign stump speech anymore; it’s become a core part of his second-term foreign policy agenda.
He’s calling the 1977 handover a "foolish gift." He’s talking about "ridiculous" fees. He’s even mentioned the U.S. Navy being treated unfairly. It sounds wild, right? But if you dig into why this is happening now, it's not just about nostalgia for the days of Theodore Roosevelt.
It’s about China. And it's about money. Lots of it.
The China Factor: Who’s Actually Running the Show?
Trump’s biggest beef isn't necessarily with Panama itself, but with who he thinks is standing behind them. During his 2025 inauguration and several Truth Social posts, he’s repeatedly claimed that "China is operating the Panama Canal."
Is that actually true? Kinda, but it's complicated. The Panama Canal Authority (ACP) is a Panamanian government entity that runs the day-to-day operations. However, Chinese companies—specifically CK Hutchison—have long-held contracts to operate the ports at both ends of the canal: Balboa on the Pacific and Cristobal on the Atlantic.
To Trump and his Secretary of State, Marco Rubio, this looks like a strategic "checkmate" by Beijing. They see it as a violation of the Permanent Neutrality Treaty. This treaty, signed by Jimmy Carter and Omar Torrijos, basically says the canal has to stay open and fair to everyone. Trump argues that if a "hostile" power like China has its hands on the ports, that neutrality is a lie.
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Recently, there’s been a massive shift to counter this. A U.S.-led consortium, involving investment giant BlackRock, moved to buy out the Chinese interests in those ports. It’s a $23 billion power play. Trump sees this as a first step, but his rhetoric suggests he won’t be satisfied until the U.S. has some form of direct oversight again.
The "Rip-Off" Narrative: Tolls and Tensions
Money talks. In Trump’s view, the U.S. is getting fleeced.
About 72% of the cargo moving through the canal either starts or ends at a U.S. port. We are the canal’s biggest customer by a mile. Because of recent droughts—which have been brutal—the canal had to limit traffic and jack up prices. Trump calls these "ridiculous fees."
He’s basically argued that since Americans built the thing, died for it (he often cites a figure of 38,000 deaths, though historians say the number of American deaths was closer to 350-500, with thousands of West Indian workers bearing the brunt), and paid for it, we shouldn’t be paying market rates.
"This complete 'rip-off' of our Country will immediately stop," Trump posted recently.
The logic here is "America First" applied to a 50-mile stretch of water. He wants preferential treatment for U.S. vessels and the U.S. Navy. The problem? The Neutrality Treaty explicitly forbids that. If Panama gives the U.S. a discount, they have to give it to everyone, or they break the law.
The Ghost of Manifest Destiny
There’s a deeper, more "expert" level to this that goes beyond just trade and China. It’s about how Trump views American power. In early 2025, he started talking about the U.S. as a "growing nation" again. He even linked it to "Manifest Destiny."
For decades, the U.S. consensus was that the Canal Zone was a relic of colonialism that made us look bad in Latin America. Handing it back was seen as a win for diplomacy. Trump is flipping that on its head. He views the handover not as a moral victory, but as a strategic retreat.
By threatening to "take it back," he’s using the canal as a "big stick" to pressure Panama on other issues, like migration. There’s a theory among some D.C. insiders that the canal threats are actually a bargaining chip to get Panama to do more to stop the flow of migrants through the Darien Gap.
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Can He Actually Do It?
Short answer: It’s legally a nightmare.
The Torrijos-Carter Treaties are binding international law. To "take it back" through legal channels would require a two-thirds majority in the Senate to basically void a previous treaty, which is almost impossible in today's polarized climate.
The other option is military force. We’ve done it before—George H.W. Bush invaded Panama in 1989 to oust Manuel Noriega. But in 2026, the global backlash would be insane. It would likely push the rest of Latin America straight into the arms of China and Russia.
What Really Matters Right Now
If you're watching this story, don't just look at the headlines about "taking it back." Look at the "salami-slicing" tactics the administration is using.
- Port Ownership: The push for U.S. companies to own the infrastructure surrounding the canal.
- Military Fees: Pressure on Panama to waive tolls for the U.S. Navy.
- Neutrality Violations: Constant claims that Chinese influence "invalidates" the 1977 deal.
Panama’s President, José Raúl Mulino, hasn't backed down. He’s been very clear: "Every square meter... is part of Panama." But Panama is also in a tough spot. Their economy is dollarized, they have no standing army, and they rely heavily on U.S. trade.
Basically, it’s a high-stakes game of chicken. Trump is using the most iconic symbol of American 20th-century power to signal that the "rules-based order" is over. Whether or not a single U.S. soldier ever sets foot back in the Canal Zone, the relationship has already changed.
Moving Forward: What to Watch For
If you want to stay ahead of this, stop looking for "invasion" news and start looking for:
- Contract Bids: Keep an eye on the bidding for the new Atlantic-to-Pacific LPG pipeline. If the U.S. demands sole-source contracts for American companies, it's a sign they're moving toward "de facto" control.
- Water Rights: Panama is investing $1.6 billion in the Río Indio reservoir to fix the drought issues. How that project is funded—and who provides the tech—will be a major flashpoint.
- The Darien Gap: Watch for "deals" where Trump softens his canal rhetoric in exchange for Panama shutting down migration routes.
The Panama Canal isn't just a shortcut for ships anymore. It’s the front line of a new kind of Cold War in the Western Hemisphere.