The elected president strongly criticized the fees charged to the merchant and naval vessels from the U.S
It was certainly anticipated that Donald Trump’s return to the White House would have various impacts on maritime transport and supply chains, but it seems that his influence is extending far beyond what was expected. This time, in his typical style, the U.S. elected president said on Saturday that the Panama Canal is charging “exorbitant transit fees” to U.S. naval and merchant vessels, and demanded that they be reduced or, alternatively, Panama should return the canal to the U.S. Going further on the matter, through his platform, Truth Social, he stated that “the fees charged by Panama are ridiculous, especially knowing the extraordinary generosity that the U.S. has shown to Panama”, adding “this complete scam against our country will stop immediately”.
Once again, China appears at the heart of Trump’s complaint, as he suggested that the canal was at risk of falling into the wrong hands, stating that the Asian country should not be the one to manage it. It is worth mentioning that China, after the U.S., is the second most important customer of the Panama Canal. Additionally, Hutchison Ports, based in Hong Kong, controls two of the five ports adjacent to the canal, one on the Atlantic side and the other on the Pacific side. In this regard, Trump stated that the Canal “was not granted for the benefit of others, but simply as a gesture of cooperation with us and Panama”.
The elected president concluded his remarks on this matter by stating, “If the moral and legal principles of this magnanimous gesture of donation are not followed, then we will demand that the Panama Canal be returned to us, in its entirety and without question. To Panama’s officials, please act accordingly!”
It is worth noting that the U.S. is responsible for approximately three-quarters of the cargo that transits the interoceanic route each year. However, the number of vessels registered under the U.S. Ship Registry that transit the Panama Canal is very minimal, as the U.S. merchant fleet accounts for only 0.4% of the global fleet.
On the other hand, a prolonged drought reduced the number of transits possible through the canal this year, a situation that, along with the Red Sea Crisis and the subsequent blockage of the Suez Canal, has put additional pressure on supply chains and contributed to global inflation.
The Panama Canal Authority assured that the interoceanic route contributed US$2.47 billion to Panama’s treasury in fiscal year 2024, marking a second consecutive annual decline.
A bit of history…
In 1903, Panama was in the process of separating from Colombia, and U.S. President, Theodore Roosevelt, supported the independence of the Central American country. That same year, an agreement was made to grant the U.S. permanent rights in the area where the construction of the canal began in 1904. The canal was finally inaugurated in 1914. In 1977, the U.S. agreed with Panama to return the territory where the Canal is located, which was finalized in 1979. Later, in 1999, the full administration of the route was handed over to Panama.
It should be noted that the current infrastructure of the Panama Canal is not the same as that developed during the U.S. administration. As on June 26, 2016, under Panama’s sovereignty, the Expanded Canal was inaugurated, which included the construction of a third set of locks, doubling the capacity of the route and allowing the transit of Neopanamax vessels.
The project had an approximate cost of US$5.25 billion, of which nearly US$3.15 billion was financed through the cash flow generated by the administration managed by the Panama Maritime Authority, while the remaining funds were financed by a series of international banks, including the Japan Bank for International Cooperation (US$800 million), the European Investment Bank (US$500 million), the Inter-American Development Bank (IDB) (US$400 million), the International Finance Corporation (US$300 million), and the Development Bank of Latin America (US$300 million).
Trump and the Expanded Trade War
Before his official rise to power on January 20, the elected president had expressed his intention to revive the Trade War with China by increasing tariffs. However, he has taken his protectionist promise further by announcing that, in response to immigration and drug trafficking from China and Mexico, he will impose a 25% tariff on imports from Canada and Mexico, and an additional 10% tariff on goods from China entering through those borders. The claim against the Panama Canal is part of this context.
Additionally, Trump recently surprised many by offering full support to the International Longshoremen’s Association (ILA) dock workers in their opposition to the automation of port labor, keeping alive the possibility of a massive strike at U.S. East Coast and Gulf ports.
Source: MundoMarítimo
