Trump's $2.5 Billion Power Play: What Seizing The Panama Canal Would Cost

Donald Trump’s threat to forcibly retake the Panama Canal would target a waterway that generates $2.5 billion in annual revenue for Panama and handles 5% of global maritime trade, raising alarm about potential disruption to international commerce.

Trump called Panama’s control of the canal “a terrible thing” during an Arizona rally, claiming Chinese soldiers operate the waterway and accusing Panama of “ripping off” American consumers through high transit fees. 

The former president later refused to rule out using military force to seize control.

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Panama’s president José Raúl Mulino defended his nation’s sovereignty. “Every square metre" of the canal belongs to Panama, he told citizens, while declining further comment until Trump takes office on January 20, according to a report issued by The Economist.

Data contradicts Trump’s claims about fees and Chinese control. Standard transit costs average under $400,000 per vessel, typically representing just 5% of total journey expenses, according to Panamanian economist Eddie Tapiero. U.S. military ships receive priority access and paid only $17 million in fees over nine years—what former U.S. Ambassador John Feeley called “budget dust.”

While Chinese soldiers don’t operate the canal, The Economist noted that China’s economic presence in Panama expanded after the country cut ties with Taiwan during Trump’s first term. Chinese firms have secured major infrastructure contracts, though American pressure blocked plans for a massive Chinese embassy near the waterway.

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The 1977 Torrijos-Carter treaties transferred canal control to Panama while guaranteeing neutrality and open access for all nations’ ships. The canal’s importance grew after 2016 upgrades allowed passage of larger “Neopanamax” vessels.

Mulino has worked to strengthen U.S. ties since taking office in July of last year, signing a migration control agreement and awarding his signature rail project to an American company. Experts suggest Trump may use the canal threat as leverage for further concessions on migration, trade or reducing Chinese influence.

The standoff echoes Ronald Reagan’s 1976 campaign rhetoric about keeping the canal under U.S. control—a message that resonated with voters concerned about American decline. 

Then, as now, the canal serves as a symbol in debates about national strength and global standing.

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