Business
Timeline: Panama Canal Politics, Policy, and Tensions
By Greg Collard and James Rushmore
Hegseth’s visit to Panama includes strongly-worded speeches directed at China
While the trade war with China plays out, another war of political rhetoric is heating up again over the Panama Canal.
Defense Secretary Pete Hegseth was in Panama this week, and pointed out America’s military presence and joint training exercises with Panamanians. Though he said the U.S. doesn’t seek war and that “war with China is certainly not inevitable,” he had a strong military message for the CCP:
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Our relationship is growing in part to meet communist China’s rising challenge. China-based companies continue to control critical infrastructure in the canal area that gives China the potential to conduct surveillance activities across Panama. This makes Panama and the United States less secure, less prosperous, and less sovereign.
He said “China will not weaponize this canal,” and it will stay that way “through the deterrent power of the strongest, most effective, and most lethal fighting force in the world.”
Hegseth followed up Wednesday with a similar message to the Central American Security Conference.
The era of capitulating to coercion by the communist Chinese is over. They’re growing an adversarial control of strategic land and critical infrastructure in this hemisphere cannot and will not stand. To accomplish this, our countries cannot face these shared threats alone. We have to face them together. America will confront, will deter, and if necessary defeat these threats alongside all of you, our close and valued partners. Our mission is simple: achieve peace through strength through an America first approach. We’re doing this by restoring the warrior ethos, rebuilding our military and reestablishing deterrence.
Obviously, that didn’t go over well with China. Its embassy in Panama accuses the U.S. of hypocrisy as it “repeats ad nauseam the ‘Chinese interference and influence.’” It noted the U.S. invaded Panama in 1989 and asked: “Who represents the real threat to the Channel? People will make their own judgment.”
(In making that judgment, a reminder that the U.S. still controlled the Panama Canal in 1989, and Panama was run by dictator Manuel Noriega who had been indicted in the U.S. on drug crimes. He was also a former CIA informant, and American officials knew about his crimes — which included helping Pablo Escobar — for years before doing anything about it).
China’s influence over the Canal has grown since 2017, when Panama severed ties with Taiwan and established diplomatic relations with China. A Chinese company controls the largest port on the Atlantic side of the Canal, and a Hong Kong company, CK Hutchinson, controls ports on both ends of the Canal. Last month, BlackRock, an American investment firm, reached a deal to buy CK Hutchinson’s ports, but that deal could be in jeopardy of falling through. Chinese firms are also building a bridge across the Canal.
President Trump has said the U.S. should have never given up the canal to Panama, which occurred on Dec. 31, 1999, as agreed to in treaties that President Carter signed in 1977 and won Senate approval the following year.
While critics place a lot of blame on Carter, Presidents Nixon and Ford started the negotiations. There was bipartisan support to reach a deal (there was even a tentative deal in place in 1967, but a coup in Panama ended those negotiations) because there were tensions and sometimes violence between locals and Americans. The audio below is from a 1976 NBC story that describes life inside the barbed wire fence that surrounded the Canal Zone: “Its 40,000 American residents, both military and civilian, enjoy a suburban lifestyle.” Panamanians on the other side of the fence were resentful.
 Listen now · 6:22 |
Ronald Reagan changed the political debate over the Canal during his primary challenge to Ford in 1976. Opposition to any deal with Panama became the focus of his campaign. Reagan says in the ad below: “We bought it, we paid for it, and General Torrijos (Panama’s dictator) should be told we’re going to keep it.”
The message was effective. Reagan won 24 states, and Ford didn’t secure the GOP nomination until the Republican National Convention.
Today’s debate over the Panama Canal
The Panama Canal was not a campaign issue in 2024. Trump first complained about passage rates charged to the Navy and U.S. shipping companies in two December 21 social media posts. Trump wrote that if the situation does not improve, “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!”
He repeated those criticisms and threats in a speech the following day:
It was not given for the benefit of others by a token of cooperation, but it was given to Panama and to the people of Panama, but it has provisions. You gotta treat us fairly, and they haven’t treated us fairly. If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, then we demand that the Panama Canal be returned to the United States of America in full, quickly and without question.
Congresswoman Debbie Wasserman Schultz called that “preposterous.” House Minority Leader Hakeem Jeffries also dismissed the idea of regaining control of the Panama Canal.
But Democratic Congressman Jared Moskowitz said Trump has a point. He dismissed the idea of taking the Canal by force, but said “the United States reasserting its history in the Panama Canal is actually a good, important, strategic issue.”
At a hearing in January, Senate Commerce Committee Chairman Ted Cruz voiced concern about the bridge that Chinese firms are building across the Canal.
The partially-completed bridge gives China the ability to block the Canal without warning, and the ports give China ready observation posts to time that action. This situation poses acute risks to U.S. national security.
A witness at that hearing, George Mason international law professor Eugene Kontorovich, testified that the presence of a Chinese company essentially means the Chinese military has a presence in the Canal.
In a communist regime, distinctions between private and government-owned firms are not as absolute or clear-cut as in a Western liberal society. This is particularly the case for the People’s Republic of China (PRC), which has an official doctrine known as “Military-Civilian Fusion,” a top-level strategy of the CCP Central Committee since 2019.
Here’s a timeline of key events in the history of the Panama Canal leading up to this week’s speeches from Hegseth.
January 22, 1903
The U.S. and Colombia, which controlled what is now Panama, agree to a treaty that gives the U.S. rights to the land to build the Canal in return for $10 million and $250,000 annually. However, Colombia’s congress rejects the deal.
November 3, 1903
With the backing of the U.S., Panama declares its independence from Colombia.
November 18, 1903
The U.S. and Panama sign the Hay-Bunau-Varilla Treaty, which establishes the Panama Canal Zone and “grants to the United States all the rights, power and authority within the zone.” The treaty has the same financial terms that Colombia’s Congress rejected. It’s ratified by the Senate and approved by President Theodore Roosevelt in February 1904.
August 15, 1914
The Panama Canal opens to shipping.
January 9, 1964
Panamanian rioters invade the Canal Zone and attempt to substitute the U.S. flag with a Panamanian one. The riots last three days, killing 22 Panamanians and four U.S. troops.
September 7, 1977
President Jimmy Carter and Panamanian dictator Omar Torrijos sign the Torrijos-Carter Treaties. Panama will take control of the Canal on Dec. 31, 1999. President Carter says:
This agreement thus forms a new partnership to ensure that this vital waterway, so important to all of us, will continue to be well-operated, safe, and open to shipping by all nations now and in the future. Under these accords, Panama will play an increasingly important role in the operation and defense of the Canal during the next 23 years, and after that, the United States will still be able to counter any threat to the Canal’s neutrality and openness for use.
Panama gains control of the Canal. Army Secretary Louis Caldera, the head of the U.S. delegation at the handover ceremony, says:
The United States could not aspire to be a good neighbor to Latin America and continue occupying and dividing the territory of a country considered a friend.
December 21, 2024
On Truth Social, President-elect Trump slams Panama for charging the United States “exorbitant prices and rates of passage” to use the Canal. He claims that China is influencing the canal’s management, before adding, “This complete ‘rip-off’ of our Country will immediately stop.”
In a follow-up post, Trump adds:
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December 22, 2024
While delivering a speech in Phoenix, Trump asks, “Has anyone ever heard of the Panama Canal? Because we’re being ripped off at the Panama Canal like we’re being ripped off everywhere else.”
When an audience member suggests taking back the Canal, Trump responds, “That’s a good idea.”
Panamanian President Jose Raul Mulino responds to Trump in a video he posts on X:
Mulino also issues a written statement, citing the Torrijos-Carter Treaties: “Every square meter of the Panama Canal and its adjacent area belong to PANAMA, and will continue to be. The sovereignty and independence of our country are not negotiable.”
He adds that passage rates are determined by “market conditions, international competition, operating costs and the maintenance and modernization needs of the interoceanic waterway,” and insists upon the Canal’s “permanent neutrality” and “open and safe operation for all nations.” He also rejects the notion that China wields any special influence over the Canal: “The Canal has no direct or indirect control from China, nor the European Union, nor the United States or any other power.”
Trump’s response:
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Trump also shares an AI-generated image with the following caption:
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December 23, 2024
Panamanian protesters gather outside the U.S. embassy to protest Trump.
Among the chants: “Get out invading gringo” and “Trump, animal, leave the Canal alone.”
They burn an American flag and set fire to an image of Trump.
“Donald Trump and his imperial delusion cannot claim even a single centimeter of land in Panama,” says one protester.
December 25, 2024
Trump posts the following Christmas message:
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Minutes later, he announces that Miami-Dade County Commissioner Kevin Marino Cabrera will serve as the next U.S. ambassador to Panama, “a Country that is ripping us off on the Panama Canal, far beyond their wildest dreams.”
December 26, 2024
Panamian President Murino holds a press conference to send a message to Trump that the Canal is not for sale.
The Canal is Panamanian and belongs to Panamanians. There’s no possibility of opening any kind of conversation around this reality, which has cost the country blood, sweat and tears.
He also denies Trump’s claim that the Chinese military has any presence in the Canal, saying, “There are no Chinese soldiers in the Canal, for the love of God.”
January 7, 2025
During a press conference at Mar-a-Lago, Trump refuses to rule out using military force to acquire the Panama Canal. He claims that it was “built for our military” and “is vital to our country.” He once again argues that the Canal is “being operated by China.”
January 9, 2025
Republican Congressman Dusty Johnson of South Dakota introduces the Panama Canal Repurchase Act of 2025, which authorizes the President and the Secretary of State to “initiate and conduct negotiations with appropriate counterparts of the Government of the Republic of Panama to reacquire the Panama Canal.”
Panama Canal Administrator Ricaurte Vásquez tells the Associated Press that the Canal cannot charge lower rates to U.S. ships. He speaks of his desire to “maintain the established rules,” insists that the Canal is a neutral economic zone, and says that the Chinese companies operating in its ports have no special influence over how the Canal is run.
January 20, 2025
During his inauguration address, President Trump describes how “American ships [that use the Panama Canal] are being severely overcharged and not treated fairly in any way, shape, or form.” He repeats his assertion that China controls the Canal and closes with the following: “We gave it to Panama, and we’re taking it back.”
Trump’s comments prompt another statement from Mulino in which he says, “The Canal was not a concession from anyone.”
Panama also sends the statement to the U.N. Security Council.
February 2, 2025
Secretary of State Marco Rubio arrives in Panama City to meet with Mulino.
Mulino attempts to assuage Rubio’s concerns about Chinese influence by announcing that Panama would allow its membership in China’s Belt and Road Initiative to expire. He also vows to allow more U.S. investments in Panama.
Later that day, Trump reiterates his interest in obtaining the Canal. He tells reporters that “something very powerful is going to happen” if Panama does not cede control over the waterway.
Secretary of State Rubio is in Panama right now, and we’re talking about the Panama Canal. What they’ve done is terrible. They violated the agreement. They’re not allowed to violate the agreement.
China is running the Panama Canal. That was not given to China; that was given to Panama, foolishly. But they violated the agreement, and we’re going to take it back, or something very powerful is going to happen.
March 4, 2025
A consortium led by BlackRock announces that it will purchase CK Hutchison’s holdings in the Panama Ports Company, which owns and operates two ports on each side of the canal. CK Hutchison is owned by Hong Kong billionaire Li Ka-shing, and it reportedly felt “political pressure to exit the ports business.” The deal is worth over $19 billion.
Trump references the deal during his address to the joint session of Congress that evening (1:19:50 of the video below).
March 5, 2025
In an X post, Mulino denies Trump’s implication that the BlackRock deal lays the groundwork for a U.S. takeover of the Canal. He accuses Trump of lying.
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March 13, 2025
NBC News reports that the Trump administration plans to bolster the U.S. military presence in Panama. Military officials tell NBC that, while the goal is to eventually reclaim control over the Canal, a U.S. invasion remains unlikely.
March 20, 2025
The Chinese government threatens to block CK Hutchison from selling its controlling interest in the two Panama Canal ports to BlackRock.
April 7, 2025
A Panamanian government investigation finds that CK Hutchison owes the country’s government over $300 million in fees because it did not properly renew its contract to operate its two ports along the Canal. This development has the potential to delay or even jeopardize the company’s deal with BlackRock.
Later that night, Secretary of Defense Pete Hegseth arrives in Panama. He will speak at the reopening of an American port and address the Central American Security Conference. He is the first secretary of defense to visit Panama in two decades.
April 8, 2025
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Hegseth meets with Mulino and Panama Canal Authority Administrator Ricaurte Vazquez.
They release a joint statement that says they agree to “strengthen bilateral Canal security cooperation,” guarantee “the expedited transit of warships and auxiliary vessels of the Republic of Panama and the United States, improve bilateral cyber cooperation,” and allocate Army Corps of Engineers resources towards ensuring the Canal’s sustainability. They also announce that they will move toward adopting a new mechanism for U.S. payment of Canal tolls and charges. The Defense Secretary praises Mulino for withdrawing Panama from the Belt and Road Initiative.
Panama’s version of their joint statement includes an additional detail: It says that Hegseth “recognized Panama’s leadership and inalienable sovereignty over the Panama Canal and its adjacent areas.”
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From the Fraser Institute
As we pause to catch our breath amid the ongoing drama of President Donald Trump’s whack-a-mole tariff war, there’s both good and bad news from a Canadian perspective.
On the positive side, Canada (together with Mexico) was not specifically targeted when the president outlined the details of his so-called “reciprocal” tariffs on April 2. These new levies—ranging from 10 per cent to more than 40 per cent, depending on the country—will affect most categories of exports from virtually every U.S. trading partner, but fortunately not America’s two co-signatories to the Canada-U.S.-Mexico Agreement (CUSMA). Instead, apart from a handful of significant economic sectors (discussed below), Canadian exporters, for the moment, will be able to sell tariff-free into the U.S. market, provided they are compliant with the rules and paperwork requirements stipulated in CUSMA. That’s a ray of sunshine in an otherwise dark sky.
On April 9, the president agreed to a 90-day pause on his sweeping reciprocal tariffs, perhaps because of plunging U.S. and global stock markets and mounting fears of economic calamity. At the same time, he announced a jaw-dropping 125 per cent tariff on imports from China, which then immediately retaliated with steep duties of its own on all U.S. goods entering the country.
The risk remains that when the dust settles, the U.S will end up applying much higher tariffs on imports from most of the world. Should President Trump adopt the reciprocal levies announced on April 2 and stick with the 125 per cent tariff on imports from China, Yale University researchers estimate that the average effective U.S. tariff rate will soar to 25.3 per cent—more than 10 times higher than the average over the preceding 25 years. That’s one measure of the disruption that Trump has visited upon the international trading system.
For Canada, the average U.S. tariff would be lower, between 4 and 5 per cent, reflecting the benefits of CUSMA, albeit somewhat offset by the negative impact of the 25 per cent levies the U.S. is imposing on all imports of steel, aluminum, and motor vehicles and parts, along with separate punitive duties on softwood lumber imported from Canada. American tariffs on these Canadian export sectors will undoubtedly exact a toll on our economy. But the damage would be considerably greater if Canada was subject to across-the-board U.S. reciprocal tariffs.
Where does all of this leave Canada’s $3.3 trillion economy as of the second quarter of 2025?
Late last year, most forecasters were expecting a modest pick-up in growth after a notably lacklustre 2024, mainly thanks to lower interest rates and reduced borrowing costs for households and businesses. However, that widely-shared view didn’t account for President Trump’s wholesale assault on the global economic system—“a new economic crisis,” as Bank of Canada Governor Tiff Macklem described the situation in late March.
Back in February, the central bank took a stab at modelling the effects of matching U.S. and Canadian tariffs of 25 per cent, levied on all bilateral goods trade (apart from energy where a lower tariff rate was assumed). Its projections pointed to a permanent loss of Canadian economic output (real GDP) on the order of 2-3 per cent, a double-digit percentage decline in business investment, weaker consumption and a substantial fall in the value of Canadian exports over 2025/26. The Bank’s modelling also foresaw a lower Canadian dollar and a temporary jump in inflation, with the latter due primarily to Canada’s assumed retaliatory tariffs.
The macroeconomic scenario outlined in the Bank of Canada’s January study was dire enough, signalling a Canadian recession stretching over most of 2025 and well into 2026. But seen through today’s lens, the Bank’s earlier analysis looks too optimistic, as it failed to incorporate the worldwide dimensions of President Trump’s tariff barrage, including the scale of the retaliation planned by America’s aggrieved trading partners.
Even if it escapes the worst of Trump’s tariffs, Canada stands to suffer from a gruesome mix of slower global growth, a probable U.S. recession, and falling prices for oil, minerals and other natural resource products, which collectively comprise around half of the country’s international exports. Already there has been a marked erosion of Canadian business confidence, as reported in the Bank of Canada’s spring Business Outlook Survey, with one-third of firms now expecting a recession and hiring intentions sinking to the lowest level in a decade. Most respondents to the Bank’s survey also anticipate rising business input costs and higher Canadian inflation in 2025.
Worryingly, the latest Bank of Canada survey was completed in February; since then, the intensity of the Trumpian chaos has continued to increase. Among other things, the uncertainty that is an inevitable by-product of the president’s shambolic policymaking is having a decisively negative impact on business investment in many industries—in Canada, to be sure, but also in the United States. As two American business analysts recently observed: “With tariff policy shifting not day by day, but hour by hour… business investment is entirely paralyzed—and will continue to be frozen for the foreseeable future. That is exactly the opposite of what Trump intended.”
It doesn’t help that Canada is in the midst of a federal election, and that the government is therefore “otherwise occupied.” Once Canadian voters have spoken, the government elected on April 28 must deal with a deteriorating economy, navigate through the tariff fog and determine how to reset economic and security relations with our principal ally and commercial partner in the turbulent era of Trump 2.0.
Jock Finlayson
Senior Fellow, Fraser Institute
From the Daily Caller News Foundation
By Hudson Crozier
People damaging Teslas in anger toward their owners and Elon Musk aren’t picking up on the fact that the vehicles have multiple cameras capable of catching them in the act.
At least nine perpetrators have been caught on video keying, writing graffiti or otherwise defacing Tesla vehicles in parking lots across the U.S. in the month of March alone. Most have led to an arrest or warrant based partly on the footage, which Tesla’s “Sentry Mode” automatically films from the side of the unattended vehicle when it detects human activity nearby.
“Smile, you’re on camera,” Tesla warned in a March 20 X post about its Sentry Mode feature. Musk’s company has been working to upgrade Sentry Mode so that the vehicles will soon blast music at full volume when vandals attack it. The camera system, however, has not stopped an increasing number of vandals from singling out Tesla owners, usually in protest of Musk’s work in the Trump administration for the Department of Government Efficiency (DOGE).
One incident happened on March 29, the same day leftists coordinated protests around the country for a “Global Day of Action” against Musk. That Saturday also saw alleged instances of violence at protests. The demonstrations stemmed from an online call to action by groups such as the Disruption Project, which encourages activists to foment “uprisings,” find a “target’s” home address and other confrontational tactics.
Tesla’s press team did not respond to a request for comment.
One man allegedly caught on camera keying a Tesla SUV on March 24 apologized to the owner who confronted him in a parking lot in Pennsylvania, police and media reports said. The man faces charges of criminal mischief, harassment and disorderly conduct for allegedly carving a swastika onto the vehicle.
“I have nothing against your car, and I have nothing against you,” the suspect said while the owner filmed him in the parking lot. “Obviously, I have something against Elon Musk.” The man called his own behavior “misguided.”
The defendant’s lawyer told Fox News his “client is a proud father, long-time resident, and is currently undergoing cancer treatment” and that he would not comment publicly “pending the outcome of the case.”
One of the most aggressive acts caught by Sentry Mode was in the case of a man who drove an ATV-style vehicle into a Tesla on March 25. Texas police identified the man as Demarqeyun Marquize Cox, arrested him and said he allegedly gave two other nearby Teslas the same treatment while also writing “Elon” on them. The public defender office representing Cox did not respond to a voicemail from the Daily Caller News Foundation.
Tesla cameras also caught three other people in Florida, Texas and Arizona keying and smearing bubble gum on the vehicles in March. The three suspects named by police do not have attorneys listed in county records available for contact.
Many of the vandalism cases since Trump’s return have reportedly caused thousands of dollars in damage for individual owners. For example, the bubble gum incident in Florida brought $2,623.66 in costs, while another keying incident in Minnesota brought $3,200.
Some reported attacks on Tesla vehicles and chargers have gotten the attention of federal law enforcement, including cases of alleged firebombing or shooting.
Two other suspected vandals in New York, one in Minnesota and one in Mississippi have reportedly avoided arrest for now — with one owner declining to press charges — but were all seen on the Teslas’ cameras scratching up the vehicles. Police identified the Mississippi suspect as an illegal migrant from Cuba.
One Tesla owner in North Dakota ridiculed a man who allegedly carved the letter “F” into his Cybertruck in a Costco parking lot — as seen on the Cybertruck’s camera. The defendant faces charges of criminal mischief, and county records say he is representing himself in court.
“I can’t believe this guy is potentially ruining his life to follow a political ideology,” the owner told WDAY News.
“If you’re going to vandalize these vehicles, you’re going to get caught,” the owner said.
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