Commentary: What Trump wants in Latin America isn’t actually the Panama Canal
Look beyond US President Donald Trump’s dubious claims and expansionist threats about the Panama Canal, says international security expert Stefan Wolff.
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BIRMINGHAM: Buy Greenland, annex Canada, take back the Panama Canal. Even before taking office for his second term, Donald Trump gave some very clear indications of a renewed focus of American foreign policy on the western hemisphere.
The Panama Canal appears to be the only one still high on the president’s agenda - enough to be singled out in his inauguration speech on Jan 20.
Trump complained that the United States has been "treated very badly from this foolish gift that should have never been made, and Panama’s promise to us has been broken". As evidence, he claimed that American commercial and navy vessels are "severely overcharged" and that "China is operating the Panama Canal".
Is Trump right regarding these claims?
DUBIOUS CLAIMS ABOUT PANAMA CANAL
There is no question that charges for using the waterway that connects the Pacific and Atlantic Oceans have increased over the years, and were raised again on Jan 1.
The reason for this is primarily a severe drought in 2023, which has reduced the water available to enable ships’ transit through the canal - a problem known for over a decade. As a result, the Panama Canal Authority has cut the number of transit slots and requires pre-booking for which it charges a fee.
Slots are also offered through an auction process, with congestion sending bids skyrocketing. One company bid a record US$4 million to jump to the front of the queue in November 2023.
Booking fees and transit fees apply to all vessels regardless of their origin, destination, or ownership. But with the US accounting for almost three-quarters of all traffic through the canal, the cost of increasing fees is particularly felt by US companies.
As for operations, the Panama Canal Authority is the autonomous legal entity that administers the canal. It is based on the Panamanian constitution and an organic law of 1997.
Trump’s claim boils down to the fact that two of the five ports at either end of the canal are operated by a subsidiary of a Hong Kong-based conglomerate CK Hutchison, with stakes in 52 ports across 26 countries.
At his confirmation hearing for the position of secretary of state, Marco Rubio raised concerns about a foreign power’s “ability to turn the canal into a choke point in a moment of conflict” through the companies that are “not independent”.
UNDERLYING CONCERNS ABOUT CHINESE PRESENCE IN LATIN AMERICA
Trump’s claims regarding the Panama Canal may be dubious, but it should be seen as a shorthand for a more assertive Latin America policy to push back against China’s expanding presence in the region.
Back in 2017, Panama switched its diplomatic recognition from Taiwan to China. The Dominican Republic, El Salvador, Nicaragua and Honduras followed.
The year after, Panama signed up to Beijing’s Belt and Road Initiative, again the first in the region to do so. By December 2024, another 21 Latin American countries had joined the initiative.
Among China’s signature infrastructure projects in the region is a deep-sea port in Peru, operated by COSCO Shipping Ports, another Chinese logistics giant with stakes in 38 ports globally.
Besides increasing its economic footprint, China has also expanded into more sensitive areas such as law enforcement and 5G technology.
RESTORING A SPHERE OF INFLUENCE
Trump’s America first doctrine will feature a return to an earlier version of the so-called Monroe Doctrine and its Roosevelt Corollary. They established the Americas as a sphere of influence for the United States and justified American intervention to prevent other powers from gaining a foothold in the western hemisphere.
Growing Chinese influence in the western hemisphere is hard to dispute. But the approach taken by Trump is likely to be counterproductive, or at least unlikely to be as effective as a more cooperative policy.
Panama’s current president, Jose Raul Mulino, for example, is widely considered a much better ally to Washington than to Beijing. Threatening him in the way Trump has is hardly a recipe for lasting success.
Trump’s vision of America first is beginning to take shape as a foreign policy of insulation and isolation. It is about restoring a secure and undisputed sphere of influence in the Americas and a reduction in Washington’s commitments to Europe and the Middle East.
All of this is meant to allow the US to prevail in its rivalry with China. Trump has so far refrained from imposing his threatened tariffs on China and is seemingly keeping the door open to a new deal with his counterpart Xi Jinping.
But both sides are hedging their bets: As the foreign ministers of the Quad countries - Australia, India, Japan and the US - met in Washington, Xi was on a 90-minute video call with Russian President Vladimir Putin. As far as the Quad is concerned, this indicates that the US sees a certain value in alliances.
Adopting this approach towards Latin America would be a way to restore US leadership in the western hemisphere and to limit Chinese influence. It would also ensure cooperation from countries in the region on other US priorities, like curbing migration and drug trafficking.
Being a good neighbour may not get Trump the Panama Canal but it may gradually secure him the sustainable sphere of influence that Washington will need to outcompete China in the long run. Bullying his neighbours may lead to some short-term successes, but it will not bring the “Golden Age” that Trump envisages.
Stefan Wolff is Professor of International Security at the University of Birmingham and Head of the Department of Political Science and International Studies.
