Donald Trump has demanded that the Panama Canal be given back to the US if Panama did not manage the waterway in a fashion that was acceptable to him – and he accused the central American country of charging excessive rates for use of the ocean-connecting ship passage.

“The fees being charged by Panama are ridiculous, especially knowing the extraordinary generosity that has been bestowed to Panama by the US,” Trump wrote on his Truth Social platform late Saturday, a little more than a month before the start of his second US presidency. “This complete ‘rip-off’ of our Country will immediately stop….”

In the evening post, Trump also warned he would not let the canal fall into the “wrong hands”. And he seemed to warn of potential Chinese influence on the passage, writing the canal should not be managed by China.

Trump said the Panama Canal was a “vital national asset” for the US, calling it “crucial” for commerce and national security.

The warning comes days after Trump mused in an early-morning thought blast that Canadians might want Canada to become America’s 51st state, taunting prime minister Justin Trudeau as “Governor Trudeau”.

Trump’s Panama thinking underscores an expected shift in US diplomacy after he takes office in January, particularly in regard to China and European security. On Friday, the Financial Times reported that Trump’s team had told European officials that he will demand NATO member states increase defence spending to 5% of their GDP.

Trump’s rhetorical threat to Panama, however, comes 25 years after the US handed full control of the canal to Panama following a period of joint administration.

In 1977, president Jimmy Carter negotiated the Torrijos-Carter Treaties that gave Panama control of the canal and the Neutrality Treaty, which allowed the US to defend the canal’s neutrality. The canal is currently administered by the Panama Canal Authority.

The US completed the 51-mile canal through the Central American isthmus in 1914 and is still the canal’s biggest customer, responsible for about three quarters of the cargo transiting through each year.

China is the canal’s second-biggest customer, and a Chinese company based in Hong Kong controls two of the five ports adjacent to the canal, one on each side.

But a prolonged drought has hampered the canal’s ability to move ships between the Atlantic and Pacific oceans. National economic council director Lael Brainard said last week that shipping disruptions contributed to the supply-chain pressures.

The Panama Canal has experienced a 29% decrease in ship transits over the past fiscal year due to severe drought conditions, according to the canal authority. From October 2023 to September 2024, only 9,944 vessels passed through the canal, compared to 14,080 the previous year.

In his post, Trump suggested that the canal was in danger of falling into the wrong hands, saying the canal isn’t China’s to manage.

“It was not given for the benefit of others, but merely as a token of cooperation with us and Panama,” Trump said.

“If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, then we will demand that the Panama Canal be returned to us, in full, and without question. To the Officials of Panama, please be guided accordingly!”

An official for Panama’s government told Bloomberg late Saturday that he was aware of Trump’s statement and there would be a formal response in the coming days.

Last month, the Nicaraguan president, Daniel Ortega, unveiled plans for a 276.5 mile (445-km) interoceanic waterway that would provide an alternative to neighboring Panama’s waterway.

In a proposal to Chinese investors at a regional business summit, Ortega said “every day it becomes more complicated to pass through Panama” and said Nicaragua’s canal project could attract Chinese and American investment, noting that the US had considered building a Nicaraguan canal as far back as 1854.

(Source: The Guardian)