5 things to know about Trump's threats to retake the Panama Canal

President-elect Trump is sparking a new feud with Panama over an old topic: the vital maritime canal connecting the Atlantic and Pacific Oceans.

What Trump is proposing would be a massive shift in the operation of the canal, which has been under Panamanian control since the turn of the millennium after a deal struck decades earlier.

But in a speech at Turning Point USA and multiple times on his social media site, Trump complained of “exorbitant prices” and said the U.S. is “being ripped off” before floating a demand to regain control of the passageway from the Central American nation.

The comment is the latest in a string of attacks Trump has launched against allies, pushing to negotiate treaties, raise tariffs or even claim new territory.

“Our Navy and Commerce have been treated in a very unfair and injudicious way. The fees being charged by Panama are ridiculous, especially knowing the extraordinary generosity that has been bestowed to Panama by the U.S. This complete ‘rip-off’ of our Country will immediately stop,” he wrote Saturday night.

The Torrijos-Carter Treaty

Trump’s comments seek to claw back a resource that has been under Panamanian control for nearly 25 years under a deal pushed by then-President Carter in 1977.

Trump complained about the deal signed by Carter, saying he “foolishly gave it away, for One Dollar.” He implied countries like China were getting undue influence over the management of the canal, a suggestion that nods to provisions of the treaty regarding neutrality.

The transition team, however, declined to respond to questions from The Hill regarding the legal basis for return of the canal.

Panama pushed back on Trump’s claims with a lengthy statement from President José Raúl Mulino, noting rates to transit the canal are not decided “on a whim.”

“These treaties also established the permanent neutrality of the Canal, guaranteeing its open and safe operation for all nations, a treaty that has obtained the adhesion of more than 40 States. Any contrary position lacks validity or support on the face of the earth,” he said.

“Our Canal has the mission of serving humanity [and] its commerce. That is one of the great values that Panamanians offer to the world, giving a guarantee to the international community not to take part, nor to be an active party in any conflict.”

A flare-up with an ally

Panama took a strong stance against any suggestion it would be returning the canal.

“As President, I want to express precisely that every square meter of the Panama Canal and its adjacent area belong to PANAMA, and will continue to be. The sovereignty and independence of our country are not negotiable,” Mulino said.

Panama has been a strong U.S. ally on economic issues and migration — both of which are key to the incoming Trump administration.

Under the Biden administration, Panama has increased its own immigration enforcement efforts at the Darién Gap, a roadless expanse of jungle connecting South and Central America that has nonetheless become a key passageway for migrants who brave the treacherous journey to continue toward the U.S. border.

Mulino said the country would still cooperate on migration and international drug trafficking but issued a warning.

“Panama respects other nations and demands respect,” he said.

U.S. relations with Panama have devolved over the canal before, including in 1964 as protests spread over a failure to raise both countries’ flags at a high school in what was then the U.S.-run canal zone. The matter led to a roughly three-month suspension in diplomatic relations between the two nations.

Republican strategist and CNN commentator Ana Navarro said any effort to make good on Trump’s threat would likely require military action.

“Trump’s threatened tariff-wars w/our allies - Canada & Mexico. Now, he’s gone koo-koo against #Panama, threatening to retake the Canal, which I guess would mean invading our ally, cuz they ain’t about to hand it over,” she wrote on the social platform X.

But one lawmaker urged the country to take the comment seriously.

“I always take the president seriously, and it’s … [a] legitimate threat to Panama,” said Rep. Carlos A. Gimenez (R-Fla.).

“He wants a better deal, and I think we need to get a better deal from — from Panama,” he added.

Panama’s management of the canal

The canal is a point of national pride in Panama, as well as a major driver of its economy.

The U.S. for years played a major role in the country, operating the canal and maintaining the 5 miles of land on either side under the control of the U.S. Canal Zone since construction of the canal was ignited with a 1903 treaty.

Under Panamanian control, authorities have made significant investments to expand the canal, including adding additional sets of locks that allowed for two-way traffic in the canal to ease wait times on other ends.

But Trump over the weekend cited U.S. contributions — including deaths of American workers who built the canal at the turn of the century — and suggested China had undue influence in managing the canal.

Trump’s claim that 38,000 Americans died building the engineering feat clashes with a fact check from the BBC that found the figure was closer to 300.

China has invested heavily in Panama, including in a number of construction deals, and does manage two of Panama’s five main ports.

Trump called turning over the canal a “magnanimous gesture” and added it was “not given for the benefit of others.”

But Mulino pushed back on those claims.

“The Canal has no control, direct or indirect, neither from China, nor from the European Community, nor from the United States or any other power. As a Panamanian, I strongly reject any manifestation that distorts this reality,” he said.

He also said the U.S. was not being charged more than anyone else.

“Rates are not a whim. They are and will be established, publicly and in an open audience, considering market conditions, international competition, operating costs and the maintenance and modernization needs of the interoceanic waterway,” he said.

An eye for unwinding deals and treaties

In returning to office, Trump has expressed frustration with a number of deals, including some he negotiated.

Trump has said he plans to raise tariffs on goods from other counties. That includes Canada and Mexico, who Trump has accused of inaction or cross-border drug trafficking and crime.

“Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem,” Trump wrote last month. “We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!”

Trading with the two nations is governed by the U.S.-Mexico-Canada Agreement (USMCA) that was signed under the first Trump administration after he negotiated terms first agreed to under the North American Free Trade Agreement. Under the terms of the USMCA, it is set to be reviewed in 2026.

Trump is also expected to make demands of the North Atlantic Treaty Organization and has reportedly floated asking member nations to increase their overall military spending.

Part of a broader territorial fixation for Trump

Trump also recently ignited another territorial debate, suggesting the U.S. try to purchase Greenland.

“For purposes of National Security and Freedom throughout the World, the United States of America feels that the ownership and control of Greenland is an absolute necessity,” Trump said in the Truth Social post over the weekend.

During his first term, Trump also raised the idea, saying that buying Greenland, which is owned by Denmark, was “strategically” interesting.

“Denmark essentially owns it. We’re very good allies with Denmark. We protect Denmark like we protect large portions of the world,” Trump said at the time.

“Strategically, it’s interesting, and we’d be interested, but we’ll talk to them a little bit. It’s not number one on the burner,” he added.

Greenland’s prime minister rejected the idea Monday.

“Greenland is ours. We are not for sale and will never be for sale,” Prime Minister Múte Egede said in a statement, according to reports from the BBC and The Guardian.

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