How China’s Influence Over Panama Canal Affects U.S. Strategies

China and USA flags in paper boats with barbed wire.

The potential for Chinese influence over the Panama Canal raises concerns for U.S. economic and military interests in a rapidly changing geopolitical landscape.

At a Glance

Panamanian leadership denies any Chinese military presence at the canal.
President-elect Donald Trump threatened to reclaim control of the canal due to high shipping rates.
China is the second-largest user of the canal and has significant investments in related infrastructure.
The canal, under Panamanian control since 1999, remains crucial for global trade.

Allegations and Denials

Panamanian President José Raúl Mulino has categorically refuted claims made by U.S. president-elect Donald Trump regarding Chinese soldiers’ presence at the Panama Canal. Mulino firmly rejected these assertions, insisting that “there is absolutely no Chinese interference or participation in anything that has to do with the Panama Canal.” This statement comes amid heightened concerns about Beijing’s growing influence in global shipping and logistics.

President Trump’s allegations have raised diplomatic tensions, with Trump suggesting that the U.S. might demand the return of control over the canal due to what he perceives as Panama’s exorbitant shipping fees. Mulino dismissed the idea of reduced tolls for U.S. ships or any transfer of control, emphasizing, “The canal is Panamanian and belongs to Panamanians. There’s no possibility of opening any kind of conversation around this reality.”

Panamanian President José Raúl Mulino dismissed Donald Trump's threats, asserting that the Panama Canal remains exclusively under Panama's sovereignty, uninfluenced by China, the EU, the US, or any other global power.https://t.co/5kKzx8rS0R

— News Central TV (@NewsCentralTV) December 23, 2024

Strategic Implications of Chinese Influence

While Trump’s claims about Chinese military involvement at the canal may not hold ground, the broader implications of China’s economic investments in Panama continue to intrigue analysts. China is not only the second-largest user of the canal but has also made extensive investments in Panamanian infrastructure. The Hong Kong-based CK Hutchison Holdings manages two crucial ports in the canal zone, adding to Beijing’s potential leverage over this pivotal maritime route.

Concerns over Chinese strategic influence may stem from their broad-reaching roles in global shipping. As the world’s largest exporter, China wields significant sway over international trade flows. Brian Hughes of the Trump-Vance transition team noted, “Chinese control of the Panama Canal absolutely poses a national security threat to the U.S.” This underscores the geopolitical tension surrounding the canal and the potential repercussions for U.S. economic dominance within the region.

In 1977, President Jimmy Carter signed a treaty to give Panama full control over the Panama Canal in 2000. And in Dec 2024, Donald Trump threatened to retake the canal from Panama. His comments denote larger aspirations, like a trade war with China. https://t.co/lEY5sUacdn

— Geopolitical Futures (@GPFutures) January 1, 2025

Economic and Military Calculations

The Panama Canal has served as a vital conduit for international trade since its completion, with approximately 14,000 vessels passing through annually. Although the canal transitioned to Panamanian control in 1999, its strategic importance remains. Trump’s calls to “reclaim” oversight highlight an underlying fear that Chinese authority might disrupt U.S. operations or restrict naval maneuvers in the Western Hemisphere, thus impacting global trade and military logistics.

Despite assurances from Panama about safeguarding its sovereignty, Trump’s rhetoric has reignited debate over control of this historically significant waterway. As the discourse continues, many will watch closely how these developments affect U.S-China-Panama relations and broader international shipping lanes.