Does China Really Control the Panama Canal as Trump Claims?

Donald Trump has justified his threats to reclaim control of the Panama Canal, asserting that China “operates” the vital waterway connecting the Pacific and Atlantic Oceans. However, the reality is far more complex.

The newly inaugurated U.S. president did not rule out the possibility of military intervention to “reclaim” the 80-kilometer canal, which was constructed by the United States and inaugurated in 1914 before sovereignty over it was transferred to Panama 25 years ago.

In response, Panama’s President José Raúl Molino affirmed, “The canal is Panamanian and will remain so.”

The canal is operated and managed by the Panama Canal Authority, an independent government agency, with the United States being its largest user, followed by China.

“Blockades and Disruptions”

A Chinese company, Hutchison Ports, holds a concession to operate the Balboa and Cristóbal ports located at both ends of the canal, on the Pacific and Atlantic sides, respectively.

U.S. Secretary of State Marco Rubio warned that, “in the event of a conflict,” China could order the “closure or disruption” of U.S. maritime traffic through the canal, labeling the canal as a “serious security concern.”

On Tuesday, Panama’s Comptroller General’s Office announced a “comprehensive audit” of the operations of Panama Ports Company to ensure “the effective and transparent use of public resources” and to determine whether the company “is complying with its concession agreements, including revenue reporting and payments to the state.”

In response, Panama Ports stated that it “fully cooperates” with the audit, noting that previous investigations had affirmed its adherence to contractual obligations.

Benjamin Gedan, director of the Latin America Program at the Wilson Center in Washington, noted, “There are logical concerns related to the presence of a Chinese company. The canal has immense value to the U.S., both commercially and strategically, and it wouldn’t be difficult for Beijing to disrupt its operations.”

However, Rebecca Bill Chavez, president of the Inter-American Dialogue, emphasized that “China does not operate or control the Panama Canal,” pointing out that Panama has maintained the canal’s neutrality and operational efficiency.

Trump, who accused the United States of “foolishly” relinquishing the canal, has claimed that Panama is “exploiting” the U.S. and insists that American ships should pay lower transit fees.

Chinese Investments in Panama

Panamanian international relations expert Euclides Tapia dismissed Trump’s claims as “baseless arguments aimed at pressuring Panama to limit its ties with China.”

Since Panama restored diplomatic relations with Beijing in 2017, its trade exchanges with China have grown significantly, though the U.S. remains its primary political and trade partner.

Chinese firms have participated in constructing a cruise ship port at the Pacific entrance to the canal and are involved in a $1.4 billion bridge project over the canal.

During Chinese President Xi Jinping’s 2018 visit to Panama, Beijing proposed additional projects worth hundreds of millions of dollars and even sought to establish an embassy at the canal’s entrance. However, this plan was reportedly abandoned due to U.S. pressure.

Use of Force

Under the terms of the 1977 treaties that led to the transfer of the canal’s administration from the United States to Panama in 1999, Panama committed to ensuring the canal remains open to all nations.

Julio Yao, a member of Panama’s negotiation team for the treaties, told Agence France-Presse: “No clause in the treaties allows or authorizes the U.S. to reclaim the Panama Canal.”

However, amendments to the treaties introduced by the United States permit unilateral military intervention to “defend the canal against any threat” of closure.

Tapia noted that this provision “could justify the use of military force in Panama, but solely to keep the canal operational, not to control or exploit it economically.”

Benjamin Gedan warned that Trump’s repeated threats on Monday “heighten the possibility that this could be a serious declaration.” While he considered military intervention unlikely, he speculated that the U.S. government might use tariffs to exert pressure on Panama.