Navigating the Vortex
Navigating the Vortex
What Trump wants in Latin America isn’t just the Panama Canal
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What Trump wants in Latin America isn’t just the Panama Canal

But bullying neighbours is unlikely to help the US to outcompete China.

Even before taking office for his second term in the White House, Donald Trump gave some very clear indications of a renewed focus of American foreign policy on the western hemisphere. This included plans to buy Greenland, annex Canada and to resume control of the Panama Canal. Of these three Panama, for now, appears to be the one highest on the US president’s agenda.

In his inauguration speech on November 20, 2025, Trump complained that the United States “have been treated very badly from this foolish gift that should have never been made, and Panama’s promise to us has been broken.” As evidence for his claim, he cited that American commercial and navy vessels are “severely overcharged” and that “China is operating the Panama Canal”.

Is Trump right regarding these claims? There is no question that charges for vessels using the Panama Canal have increased over the years and were raised again on January 1, 2025. The reason for this is primarily a severe draught in 2023 which has reduced the water available to enable ships’ transit through the canal (a problem known for over a decade). As a result, the Panama Canal Authority requires pre-booked transit slots, for which it charges a fee. Slots are also offered through an auction process, with congestion sending bids skyrocketing. One company paid a record US$4 million to jump to the front of the queue in November 2023.

Booking fees and transit fees apply to all vessels regardless of their origin, destination, or ownership—but with the US accounting for almost three-quarters of all traffic through the canal, the cost of increasing fees is particularly felt by US companies.

Similarly, Trump is not correct in claiming that “China is operating the Panama Canal”, as he did during his inauguration address. The Panama Canal Authority is the autonomous legal entity that administers the canal. It is based on the Panamanian constitution and an organic law of 1997.

However, China has considerable influence over the operation of the canal. Two of the five ports at the Atlantic and Pacific entry ports of the canal are operated by a subsidiary of Hutchison Whampoa, a Hong Kong-based conglomerate with stakes in 52 ports across 26 countries. This has given rise to concerns that a foreign power now has the “ability to turn the canal into a choke point in a moment of conflict”, as Trump’s secretary of state, Marco Rubio, noted during his confirmation hearing. Rubio, whose first official trip abroad will include a stop-over in Panama, acknowledged that “technically” China does not control the canal but made the point that Beining wields significant influence through commercial actors that are ultimately “not independent”.

Back in 2017, Panama was the first Latin American country to switch its diplomatic recognition from Taiwan to the PRC. Four other countries—the Dominican Republic, El Salvador, Nicaragua, and Honduras followed. One year later, Panama signed up to Beijing’s Belt and Road Initiative, again the first country in the region to do so. By December 2024, another 21 Latin American countries had joined the initiative.

Among China’s signature infrastructure projects in the region is a deep-sea port in Peru, operated by COSCO Shipping Ports, another Chinese logistics giant with stakes in 38 ports globally. But China has not only increased its economic footprint in Latin America but also expanded into even more sensitive areas such as law enforcement and 5G technology.

The claims regarding the Panama Canal may be dubious, and Trump would certainly be on shaky legal grounds if he were to attempt “take back” the Panama Canal. After all, the hand-over to Panama is based on a bilateral agreement, the 1977 Torrijos-Carter Treaty, and further backed up by an accompanying neutrality arrangement. But as a shorthand for a more assertive Latin America policy, the way in which Trump talks about Panama is an indication of how US foreign policy towards the region is likely to evolve.

Trump’s America first doctrine will feature a return to an earlier version of the so-called Monroe Doctrine and its Roosevelt Corollary – named, respectively, after the fifth and twenty-sixth US presidents – which established the Americas as a sphere of influence for the United States and justified American intervention to prevent other powers from gaining a foothold in the western hemisphere.

Although the policy of intervention was replaced in the early 1930s by the “Good Neighbour” policy, it was never completely abandoned and resurfaced in the US interventions in Grenada in 1983 and Panama in 1989. Unsurprisingly, countries in the region have reacted with alarm to Trump’s posturing. Panama has taken the issue to the UN Security Council where it currently serves a two-year term as a non-permanent member, ironically together with Denmark which was elected at the same time.

The problem, therefore, is not that the new US administration has misdiagnosed a problem. Growing Chinese influence in the western hemisphere is hard to dispute. But the approach taken by Trump is likely to be counter-productive, or at least unlikely to be as effective as a more cooperative policy. Panama’s current president, José Raúl Mulino, for example, is widely considered a much better ally to Washington than to Beijing. Threatening him in the way Trump has is hardly a recipe for lasting success.

Trump’s vision of America first is beginning to take shape as a foreign policy of insulation and isolation. It is about restoring a secure and undisputed sphere of influence in the Americas and a reduction in Washington’s commitments to Europe and the Middle East. All of this is meant to allow the US to prevail in its rivalry with China. Trump has so far refrained from imposing his threatened tariffs on China and is seemingly softening his anti-China rhetoric keeping the door open to a new deal with his counterpart Xi Jinping.

But both sides are hedging their bets: as the foreign ministers of the Quad countries – Australia, India, Japan, and the US – met in Washington, Xi was on a 90-minute video call with Russia’s president, Vladimir Putin. As far as the Quad is concerned, this indicates that the US, including Trump’s now-confirmed Secretary of State, Marco Rubio, see a certain value in alliances.

Adopting this approach towards Latin America would be a way to restore US leadership in the western hemisphere and to limit Chinese influence. It would also ensure cooperation from countries in the region on other US priorities, like curbing migration and drug trafficking.

Being a good neighbour may not get Trump the Panama Canal, but it may gradually secure him the sustainable sphere of influence that Washington will need to outcompete China in the long run.

Bullying his neighbours may lead to some short-term successes, but it will not bring the “Golden Age” that Trump envisaged in his inauguration address.


This is an updated and expanded version of a commentary published by Channel News Asia on January 25, 2025.


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