President Donald Trump declared on Wednesday that the United States would not permit China to seize control of the Panama Canal, using a speech at the opening of the Theodore Roosevelt Presidential Library in Medora, North Dakota, to reignite a long-standing dispute over the strategic waterway. “Now China’s trying to take over the Panama Canal, and we’re not going to let that happen,” Trump said, according to his prepared remarks. He described the 1999 handover of the canal to Panama under the 1977 Torrijos-Carter Treaties as a “stupid” mistake, alleging that Panama immediately raised transit fees fourfold and later doubled them again, generating “tremendous amounts of money” while the US lost a critical asset.

Viewed from Washington, the canal is a vital artery for American commerce and naval mobility, handling roughly 40 per cent of all US container traffic and over $270 billion in cargo annually. Trump’s intervention is the latest in a series of threats: before returning to office he refused to rule out using economic or military force to retake the waterway, and in January 2025 he asserted that the US had not gifted the canal to China, which he claimed was “operating” it, but to Panama, and that Washington would “take it back”. Those earlier statements prompted Panama to file a formal complaint with the United Nations, where its ambassador invoked the UN Charter’s prohibition on the threat or use of force against the sovereignty of another state.

Panamanian officials have consistently rejected any suggestion of Chinese control over the canal itself, which remains under the authority of the Panama Canal Authority. However, a separate legal battle has intensified the geopolitical friction. In February, Panama’s Supreme Court ruled that a 1997 law granting a concession to Panama Ports Company (PPC), a local subsidiary of Hong Kong-based CK Hutchinson Holdings, to operate the Balboa and Cristóbal ports at either end of the canal was unconstitutional. The government temporarily assumed management of the terminals. Beijing, through its Hong Kong and Macau Affairs Office, called the court decision unreasonable and a violation of the company’s legal rights; CK Hutchinson has since filed a lawsuit against Panama. Without naming the United States directly, Chinese authorities accused Panama of bowing to “hegemony” and succumbing to “pressure and intimidation”, warning of unspecified political and economic consequences.

The confluence of Trump’s rhetoric and the port contract dispute has placed the canal at the centre of renewed US-China competition in Latin America. The waterway shortens the sea journey between the Atlantic and Pacific by thousands of miles, making it indispensable for global supply chains, with over 13,000 vessels carrying about five to six per cent of world trade transiting each year. While the canal’s neutrality is enshrined in treaty, the legal fight over the terminal concessions is now before Panamanian courts, and no change in the canal’s operational control is imminent. Diplomatic observers note that the case is likely to test Panama’s ability to balance its commercial ties with China against its security relationship with Washington, with the next procedural steps in the CK Hutchinson lawsuit expected in the coming months.