Trump wants the Panama Canal. Who owns it? Can US take it?

United States President Donald Trump again reiterated him intention of reclaiming the Panama Canal.

“American ships are being severely overcharged and not treated fairly in any way, shape or form, and that includes the United States Navy. And above all, China is operating the Panama Canal. And we didn’t give it to China, we gave it to Panama, and we’re taking it back,” said Trump in his recent inaugural address on Monday.

Trump’s comments have drawn sharp responses from Panamanian leaders but also reignited discussions about US interests in the strategic waterway.

Who owns the Panama Canal?

The Panama Canal, a vital waterway connecting the Atlantic and Pacific Oceans, has been under the ownership and operation of the Panamanian government since December 31, 1999.

It is managed by the Panama Canal Authority (PCA), an autonomous government entity responsible for its operations, maintenance, and modernisation. The PCA sets transit fees, which have seen significant increases in recent years to align with global shipping standards and to support ongoing upgrades.

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The canal’s history traces back to US involvement in its construction, which began in 1904 following Panama’s independence from Colombia — a movement supported by the United States.

Over 5,600 workers lost their lives during the US-led construction effort. The canal opened in 1914 and revolutionised global shipping by offering a shortcut between oceans, saving ships approximately 7,000 miles of travel around South America’s Cape Horn.

However, US control of the canal sparked long-standing tensions with Panamanians, culminating in the 1977 Panama Canal Treaties signed by US President Jimmy Carter and Panamanian leader Omar Torrijos.

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These treaties facilitated the gradual transfer of the canal to Panama while guaranteeing its permanent neutrality. Since then, Panama has efficiently managed the canal, overseeing traffic growth and a $5.2 billion expansion project completed in 2016 to accommodate modern cargo ships.

Why does Trump want the Panama Canal back?

Trump’s interest in the Panama Canal isn’t new. He has previously expressed dissatisfaction with the 1977 treaties, claiming that the United States “foolishly” gave the canal away. In his 2025 inaugural address, he argued that “Panama’s promise to us has been broken” and alleged that “China is operating the Panama Canal.”

While the canal remains under Panamanian control, Chinese investments in Panama have grown, including a Hong Kong-based consortium’s operation of ports at either end of the canal since 1997.

Trump’s remarks reflect broader concerns about China’s influence in the region. In 2017, Panama cut diplomatic ties with Taiwan and deepened its relationship with Beijing, resulting in increased Chinese investments in infrastructure and trade.

“And we didn’t give it to China, we gave it to Panama, and we’re taking it back,” said Trump. This shift has alarmed US policymakers, who view the canal as a strategic asset critical to American economic and national security interests.

What can the US do to reclaim the Panama Canal?

Despite Trump’s rhetoric, experts agree that the United States has limited options for reclaiming control of the canal.

The 1977 treaties do not provide any legal pathway for the US to retake ownership, except in cases where the canal’s operation is threatened by military conflict. Former canal administrator Jorge Luis Quijano stated that “there’s no clause of any kind in the neutrality agreement that allows for the taking back of the canal.”

“Legally, there’s no way, under normal circumstances, to recover territory that was used previously.”

One viable approach for the US is to increase economic engagement with Panama. Trump could leverage his administration’s tools to boost US investment in Panama’s tech and maritime sectors, as well as construction projects linked to canal operations. Greater US business presence could help counterbalance Chinese influence and strengthen bilateral ties.

Panama’s current government, led by President José Raúl Mulino, appears open to closer cooperation with the United States. Mulino, who assumed office in July 2024, has expressed concerns about excessive Chinese investment and has called for more US involvement in Panama’s development.

However, Mulino has been firm about Panama’s sovereignty over the canal, stating, “Every square meter of the canal belongs to Panama and will continue to.”

What now for the Panama Canal?

The Panama Canal has long been a symbol of US engineering prowess and geopolitical influence. Former US President Theodore Roosevelt once called it “one of the feats to which the people of this republic will look back with the highest pride.”

Today, it continues to serve as a critical conduit for global trade, particularly for US businesses relying on efficient supply chains. Trump said, “We have been treated very badly from this foolish gift that should have never been made.”

However, challenges such as rising fees, drought-induced shipping restrictions, and geopolitical competition pose risks to the canal’s future.

While Trump’s rhetoric may appeal to nationalist sentiments, any move to reclaim the Panama Canal would face significant legal, diplomatic, and logistical hurdles.

“There’s very little wiggle room, absent a second US invasion of Panama, to retake control of the Panama Canal in practical terms,” AP quoted Benjamin Gedan, director of the Latin America Program at the Woodrow Wilson International Center for Scholars in Washington.

“If you’re going to pick a fight with Panama on an issue,” Gedan said, “you could not find a worse one than the canal.”

With inputs from agencies