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Kissinger once warned: «If we take back this canal, we will lose in all international forums, and there will be unrest throughout Latin America».
Even before his inauguration, President-elect Donald Trump began issuing threats to both potential guests and loyal allies.
Panama was the first to receive such a warning. «We are being robbed of the Panama Canal», he declared on November 5, 2024 — election day — complaining that President Jimmy Carter had «foolishly given it away». «If the principles — both moral and legal — behind this generous gesture are not upheld, we will demand that the Panama Canal be returned to the United States of America in full, quickly, and without question. I will not tolerate anything less, so please take note, officials of Panama», Trump stated unequivocally, falsely claiming that the waterway is «run by Chinese soldiers».
The threat of military intervention and territorial seizure by American commandos has alarmed regional leaders. If such claims are made against a close U.S. partner like Panama, what fate awaits other Latin American countries that Trump considers merely «backyard»?
Panama’s official response to Trump was not long in coming: conservative President José Raúl Mulino, elected in May 2024, immediately hit back. In a public statement, Mulino rejected any claim of Chinese control. «Panamanians may have different views on many issues», he said, «but when it comes to our canal and our sovereignty, we stand together under our Panamanian flag».
«As president, I want to make it clear that every square meter of the Panama Canal and its surrounding areas belong to Panama and will remain so. The sovereignty and independence of our country are not up for debate», the Panamanian president told his countrymen. «We’ll see!» Trump responded on his Truth Social platform, attaching a photo of the American flag flying in the Canal Zone with the caption: «Welcome to the United States Canal!»
Mulino found support from Colombia, Mexico, and other Latin American countries in his dispute with Donald Trump over the Panama Canal.
Colombian President Gustavo Petro said on his X account that he would stand with Panama «to the end» and defend its sovereignty. Mexican President Claudia Sheinbaum also expressed solidarity and support for the president and people of Panama.
Is it realistic for the United States to regain the Panama Canal? Only by armed invasion.
Even if Trump were to follow through on his threat and demand the return of the Panama Canal, his claims would not have sufficient legal or international backing: the 1977 treaties allow the United States to intervene militarily in the Panama Canal only if a military conflict affects its operation and security, not to regain control of it.
Any means beyond diplomacy to achieve this goal would exceed international legality and violate the treaties signed between the two countries.
Jorge Luis Quijano, who served as canal administrator from 2014 to 2019, claims that «there is not a single provision in the neutrality agreement that allows the canal to be taken back».
Former U.S. Ambassador to Panama John Feeley, who led the diplomatic mission under Presidents Barack Obama and Donald Trump, said regaining the canal would require military intervention. «To try to get it [the Panama Canal] back now, I’d like to see you find MAGA supporters who would support another foreign war, because that’s what it would take to get the canal back», Feeley said in an interview with CNN.
«Let’s not forget that Jimmy Carter was not the only one who thought [the Permanent Neutrality Treaty] was a good idea. No less a person than Henry Kissinger told then-President Nixon in 1975, ‘If we don’t give [Panama] this canal, we will lose in all international forums and there will be unrest throughout Latin America’», Feeley recalled.
In 1977, the Jimmy Carter administration signed two treaties with the government of Omar Torrijos: the Permanent Neutrality Treaty and the Panama Canal Treaty. The first is open-ended and gives the United States the right to act to keep the canal open and safe. The second stipulates that the United States will transfer the canal to Panama on December 31, 1999.
Both treaties were ratified in 1978. They remained in effect even after 1989, when American commandos under President George H.W. Bush invaded Panama and overthrew Panamanian leader Manuel Noriega.
The Panama Canal is an 82-kilometer-long artificial waterway with a system of locks and reservoirs that crosses Panama and connects the Atlantic and Pacific Oceans. The canal saves ships an additional 11,000 kilometers of travel around Cape Horn at the southern tip of South America. According to Reuters, approximately 14,000 ships — about 2.5% to 3% of the world’s maritime trade — pass through the Panama Canal each year. Approximately 70% of these ships are tied to the United States (either by flag, port of origin, or destination).
According to the U.S. International Trade Administration, the canal saves American businesses «significant amounts of time and fuel» and speeds the delivery of goods, which is «particularly important for time-sensitive cargoes, perishable goods, and industries with just-in-time supply chains».
The «Treaty of Permanent Neutrality» states that Panama «declares the neutrality of the Canal so that in time of war as well as in time of peace it shall remain safe and open to the peaceful transit of vessels of all nations on terms of complete equality, without any action against any nation or its allies, and without any discrimination in terms or costs of transit».
In addition, the United States enjoys certain benefits, such as «expedited passage», including for its military and auxiliary vessels, which puts them at the front of the transit line. «This is a privilege that the United States enjoys over the rest of humanity under the terms of the ‘Neutrality Treaty’», explains Benjamin Gedan, director of the Latin America program at the Woodrow Wilson International Center for Scholars in Washington.
Panamanian management of the canal is widely regarded as more efficient than under U.S. ownership. Between 1999 and fiscal year 2004, cargo traffic increased by 7 percent. In 2006, Panamanian voters approved in a referendum a major expansion of the canal to accommodate larger, more modern cargo ships. The work took ten years and cost more than $5.2 billion.
Today, it is one of Panama’s greatest assets. Although 2024 was a difficult year for the canal due to drought, the infrastructure helped Panama achieve the highest GDP growth in Latin America. That year, the canal’s revenues totaled nearly $5 billion, or about 4% of the country’s GDP.
According to Trump, the canal — valued at nearly $1.2 trillion — could fall into the hands of a foreign adversary, primarily China. The Center for Strategic and International Studies (CSIS) notes that China’s growing presence in and around Panama «raises concerns in the United States about ambitions seen as threatening the canal’s neutrality».
China has not publicly expressed any interest in acquiring the canal. In response to Trump’s accusations, the Chinese Foreign Ministry responded bluntly: «The Panama Canal is a great creation of the Panamanian people, and China has always supported their just struggle to maintain sovereignty over the Panama Canal».
Meanwhile, China is the second largest user of the Panama Canal after the United States, and its investments in Panamanian ports and infrastructure have increased significantly in recent years.
In 2018, Beijing successfully persuaded Panama City to join its Belt and Road Initiative, and Chinese companies are actively involved in infrastructure projects along the waterway.
Chinese companies operate major ports at both ends of the canal. In 2021, Hong Kong-based Hutchison PPC extended its 25-year lease to manage the ports of Balboa and Cristóbal.
In 2016, China’s Landbridge Group acquired Margarita Island — Panama’s largest port on the Atlantic coast and a major free trade zone — for $900 million. This transaction led to the construction of the Panama-Colón container port for large tonnage ships.
No evidence was found of U.S. investment in the expansion and modernization of the canal. Nor is this the main issue. All of this fits into the broader strategy of ratcheting up tensions that recent White House administrations have pursued with Beijing and its cooperation with Latin American countries. This is one side of the coin.
On the other hand, from Panama to Greenland, President-elect Trump’s expansionist ambitions suggest that seizing Panama-as 32nd U.S. President Franklin Delano Roosevelt once did — could give the United States access to the Canal, while purchasing Greenland, as Trump also proposes, would secure a U.S. presence at the entrance to the future Northwest Passage through melting Arctic ice.
In Trump’s view, in the context of international competition, sea lanes «must be seized, controlled, and monopolized, rather than shared among countries with equal access for all».
As the former and now returning president moves back into the Oval Office, Trump’s aggressive statements reflect the unpredictability that characterized his previous term and may similarly characterize this new one. This is alarming both allies and adversaries, prompting world leaders to analyze his true intentions and prepare for possible worst-case scenarios.
«Trump is challenging established norms and undermining traditional alliances», the American publication The Hill admits.
«Americans love to hate government. About half of our citizens currently believe there is, in fact, a ‘deep state’ — shadowy politicians running our government behind the scenes. But no matter how frustrating or inefficient bureaucratic structures may be, we all rely on them to live normal lives the way we want to”, observes the New York Times in relation to Trump’s aggressive «bravado», concluding: «Trump is destroying the systems that keep us safe. All Americans will suffer».