Donald Trump has been burning bridges with his Central American neighbours over the Panama Canal.
The US president-elect spoke out about the vital waterway at AmericaFest, a four-day event for conservative politics, at the weekend.
He has accused Panama of charging excessive rates to use the crucial trade passage, which allows ships to cross between the Pacific and Atlantic oceans, and threatened to reassert control of it.
The claims have been refuted by Panama but Trump has stood by his comments. Here’s what he has said and what is behind his recent outburst.
What did Donald Trump say about the Panama Canal?
Speaking at AmericaFest on Sunday, Trump asked the crowd: “Has anyone ever heard of the Panama Canal?” Because we’re being ripped off at the Panama Canal like we’re being ripped off everywhere else. The fees being charged by Panama are ridiculous, highly unfair.
He added: “It was given to Panama and the people of Panama, but it has provisions. 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, quickly and without question.”
And he said he would not let the canal fall into the “wrong hands”, a reference to China having control over it.
After the event, he posted an image on his social media channel Truth Social of an American flag flying over a narrow body of water, with the comment: “Welcome to the United States Canal!”
It came a day after he took to Truth Social saying the Panama Canal was a “vital national asset” for the US.
He posted: “When President Jimmy Carter foolishly gave it away, for One Dollar, during his term in Office, it was solely for Panama to manage, not China, or anyone else.
“It was likewise not given for Panama to charge the United States, its Navy, and corporations, doing business within our country, exorbitant prices and rates of passage.”
Trump is not the first US president to want to regain control of the canal.
Ronald Reagan had his sights set on i in the 1980s, infuriating his former acting colleague John Wayne who wrote a letter to the president berating him for not backing the treaty handing control to Panama.
Wayne’s first wife was from Panama and he counted Panama’s de facto leader Omar Torrijos Herrera among his friends.
What did the President of Panama say about the canal?
In a recorded message released on Sunday afternoon, Panama’s President José Raúl Mulino responded to Trump’s comments, saying China had no influence on the canal’s administration.
He said: “Every square metre of the Panama Canal and the surrounding area belongs to Panama and will continue belonging [to Panama].”
Trump responded: “We’ll see about that!”
What is the Panama Canal?
The 51-mile waterway in Panama connects the Atlantic Ocean with the Pacific Ocean and is a major conduit for maritime trade.
France began work on the canal in 1881 but stopped in 1889 due to a lack of investors’ confidence after engineering problems and a high worker mortality rate.
The US took over the construction in 1904, completing it in 1914 and maintaining control of the canal and surrounding area until 1977.
In September 1977, the Torrijos-Carter Treaties were signed by US president Jimmy Carter and Omar Torrijos, leader of Panama, starting the process of granting free control of the canal to Panama as long as it guaranteed permanent neutrality of the waterway.
Panama was granted full control in December 1999. The Panama Canal Authority (ACP) now manages the waterway, which is one of the main sources of revenue for the country.
It is not clear how Trump would seek to regain control over the canal. He would have no recourse under international law.
How many ships use the Panama Canal?
Up to 14,000 ships use the canal each year, including container ships and military vessels, accounting for 2.5 per cent of global seaborne trade.
It is critical to US imports of cars and commercial goods by container ship from Asia, and for US exports of commodities, such as liquefied natural gas.
Ships using the canal must pay fees set by the canal authority. They vary based on the size and purpose of vessels, with charges going as high as $300,000.
The Panama Canal recorded a decrease in transits in the fiscal year to 2024, due to drought in late 2023, transits fell by nearly a third in the year to this September.
The ACP (Panama Canal Authority) has allowed more ships to use the canal in 2024 to ease congestion, but it will increase charges and introduce some additional fees on 1 January 2025.
President Mulino has defended the passage rates Panama has charged, saying they were not set “on a whim”.
The rates were “established publicly and in an open hearing, considering market conditions, international competition, operating costs and the maintenance and modernization needs of the interoceanic route,” he added.
China does not have control of the waterway. However, a subsidiary of Hong Kong-based CK Hutchison Holdings has long managed two ports located on the canal’s Caribbean and Pacific entrances.
