Almost half a century after US president Jimmy Carter signed the Torrijos-Carter Treaties in 1977, which transferred control over the Panama Canal in 1999 to Panama, President Donald Trump now says he wants it back for the United States.
Trump’s vision harks back to the muscular nationalism of president Theodore Roosevelt, who oversaw the canal’s construction. While Trump’s hyperbole may lack veracity, he grasps the canal’s geostrategic value with the instinct of a real estate developer, amid the intensifying US-China rivalry.
The Panama Canal treaties contain important provisions defining its neutrality and guaranteeing unfettered access to American vessels. The canal has high military value to the US, allowing the ready deployment of its navy between the Atlantic and the Pacific.
While US military ships have priority passage, all users of the Panama Canal are charged the same rates based on vessel size but adjusted by capacity and for demand. Droughts in recent years as a result of global warming have seen transit fees rise.
In the years after the canal was handed over to Panama, it invested more than US$5 billion into widening work, which culminated in the opening of the canal’s third set of locks in 2016. Such expansion was needed to accommodate the growing trade between East Asia and America’s East Coast, the dominant trade route for the canal.
In recent years, declining US-China trade from higher tariffs may have relieved congestion in the Panama Canal. Hong Kong’s CK Hutchison Holdings operates ports at both ends of the canal through a subsidiary. But at the Atlantic end, there are two other ports operated by companies based in the US and Taiwan. A Chinese consortium is building a fourth bridge over the canal.