Chethana Janith, Jadetimes Staff
C. Janith is a Jadetimes news reporter covering science and geopolitics.
In the second half of December 2024, US President-elect Donald Trump provoked a diplomatic scandal involving several Latin American nations over the potential return of the Panama Canal under Washington’s control.
Trump Against Tariffs
Panamanian President José Raúl Mulino publicly addressed Trump's comments, assuring that “every square meter of the Canal and its adjacent zones belongs to Panama.” Mulino also denied reports of Chinese soldiers being present in the Canal zone. Many citizens and social organizations in Panama reacted negatively to Trump's statements, organizing a protest near the US Embassy in Panama City.
It's important to note that Trump likely knew his remarks would provoke a strong reaction from Panamanian authorities, for whom sovereignty over the Canal is a highly sensitive issue. This sensitivity extends to several Latin American countries, especially given China's growing influence in the region. Additionally, Panama is a crucial transit country for migrants from South America, making it important for the US to maintain positive relations with Panama to manage the flow of illegal migration.
Mulino firmly dismissed any possibility of lowering tariffs for vessel passage, stating there was no need. Since January 2023, the Panama Canal Authority (PCA) had already reduced the number of tariffs from 430 to 60. They introduced a fixed transit fee based on the lock used and vessel type, but increased fees for transit reservations. As of January 2025, these fees rose from $41,000 to $50,000 for Panamax-class vessels, including medium-range tankers. For Neopanamax-class vessels, fees increased from $80,000 to $100,000. In 2024, the average transit fee for a medium-range tanker through the Panama Canal was approximately $280,000, while for a Very Large Gas Carrier (VLGC), this figure exceeded $505,000. By comparison, transit fees through the Suez Canal during the same period were $274,000 and over $487,000, respectively. This indicates that passage through the Panama Canal is more expensive, although both canals have increased their transit costs. The Suez Canal's fee increase is attributed to heightened risks from the Israeli-Palestinian conflict, whereas Panama’s fee hike is linked to the historic drought of 2023–2024. However, the American president appears to overlook this context.
Trump has also referred to PCA data indicating that in the 2024 fiscal year, vessels heading to the US accounted for about 75% of Canal traffic (40% of all US container shipments), while vessels from China made up 22%, Japan 14%, and South Korea 9%. However, Trump ignores the fact that the vessels carrying these goods are not American but are primarily owned by shipping companies such as China’s COSCO Shipping, Denmark’s Maersk, France’s CMA CGM, Switzerland’s MSC, and Israel’s Zim, who are the ones paying for transit.
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