The Panama Question

Donald Trump has once again reached deep into the recesses of American history to pull out a revealing and newly pertinent subject by proposing that the U.S. once again assume ownership over the Panama Canal. In a post on X, Trump expressed his concern with potential Chinese influence over the canal, and asserted that the government of Panama is currently overcharging American shipping. He continued:

The United States has a vested interest in the secure, efficient, and reliable operation of the Panama Canal, and that was always understood. We would and will NEVER let it fall into the wrong hands! It was not given for the benefit of others, but merely as a token of cooperation with us and Panama. 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.

Trump’s claim that the U.S. has a vital interest in Panama and its canal harks back to the early exponents of American great power competition. The canal was seen as the keystone of American empire and the greatest security for American dominance in the Western hemisphere. Alfred Thayer Mahan, the great American naval theorist, wrote in 1897, 

the Isthmus, with all that depends upon it,—its canal and its approaches on either hand,—will link the eastern side of the American continent to the western as no network of land communications ever can. In it the United States has asserted a special interest. In the present she can maintain her claim, and in the future perform her duty, only by the creation of that sea power upon which predominance in the Caribbean must ever depend.

Theodore Roosevelt, speaking under the sway of Mahan’s monumental work The Influence of Sea Power Upon History, declared that his own expansive vision for the United States rested upon the completion of an isthmian canal connecting the two great oceans bordering the United States: “If we are to hold our own in the struggle for naval and commercial supremacy, we must build up our power without our borders. We must build the Isthmian canal, and we must grasp the points of vantage which will enable us to have our say in deciding the destiny of the oceans of the east and west.”

Mahan and Roosevelt presciently considered the destiny of the ascendant United States to be dominance through naval and commercial power, and considered control of the future interocean route to be of utmost importance. A canal would enable the rapid expansion of American trade and influence in Asia (to the detriment of competing naval power Great Britain), funnel great amounts of trade from other countries through the regional waters of the United States, and enable the rapid transit of American naval assets between oceans. Such a situation would also compel the country to establish the regional influence and naval power necessary to secure its interests and defend its hold over the route.

To secure that advantage, the U.S., principally under the leadership of president Theodore Roosevelt, expended no small amount of blood and treasure. Between 1903 and 1914, the country spent over $375 million (about $12 billion in 2024 dollars) to obtain and construct the canal. Nearly 6,000 people died during the American portion of its construction, most from disease and the influence of the climate. When the canal opened, it was the largest construction project in the world.

The rush to secure the Panama canal also served to inaugurate for the 20th century an unfortunate tradition of short-sighted American intervention in Latin America. The Spooner Act of 1902, which authorized the purchase of the canal zone, provided $40 million for the acquisition of the French Compagnie Nouvelle du Canal de Panama, which owned the land and the remains of a failed French effort to dig the canal, and $10 million for the purchase of the canal zone from Colombia, conditional on securing a treaty with that government. 

Colombia, which controlled the Isthmus of Panama in 1902, like many other Latin American nations at the time, was still favorably disposed towards the United States. The U.S. was seen as the great standard bearer of liberty and independence in the New World, and George Washington was honored as the Anglo counterpart to Colombia’s great hero Simon Bolívar. But the Colombian government was still weak and fragile, and its succession of inexperienced diplomats infuriated the Roosevelt White House, which was intent on securing the canal quickly and on its own terms. 

Worse still, while the American and Colombian diplomats were in the process of hashing out treaty terms, Roosevelt landed U.S. Marines in Panama in response to local disturbances near the American-run Panama Railroad without consulting Colombian authorities, an incident which enraged the Colombians and made them hesitant to make agreements with the U.S. which might potentially endanger Colombian sovereignty.

The Hay-Herrán Treaty was finally signed in 1903, but not before word reached Colombia of the poor treatment of their diplomats by their American counterparts. The Colombian people were incensed, and the national legislature delayed ratification of the treaty while attempting to negotiate a settlement with the French canal company to permit its transfer to the U.S. The American response, sent by Roosevelt’s Secretary of State John Hay, demonstrated that the self-confidence of American leadership had flowered into that familiar imperial vice, arrogance. “If Colombia should now reject the treaty or unduly delay its ratification,” Hay wrote, “action might be taken next winter which every friend of Colombia would regret.” The substance of the matter was not lost on the Colombian government, which refused to be dictated to in such a manner, and the treaty was soundly rejected.

Roosevelt and Hay wasted no time in pressing forward with their plans, regardless of the feelings of the Colombians. Agents for both the American government and the Compagnie Nouvelle provided plans, support, and a generous amount of funding to local leaders, who rapidly paid off the local garrison and proclaimed an independent Republic of Panama. Before the year was out, the new nation had ratified a treaty with the U.S. handing over the Canal Zone in its entirety for $10 million.

Although the creation of Panama did help the U.S. secure better terms for the Canal Zone than it might have been able to obtain from Colombia, the entire process was completely unnecessary. A more diplomatic approach would have secured an agreement with minimal cost to Americans and avoided alienating a friendly nation in the American sphere of influence. It would have also prevented the setting of an unfortunate precedent that would eventually result in the casual overturning of Central American governments as a personal favor to fruit companies, and the accompanying damage to American influence in the region.

Ironically, despite Roosevelt and Mahan’s vision of the canal as the keystone of American naval power in two oceans, the canal has been of relatively little military importance since its construction, including during the course of the two world wars that followed. Its most important service was assisting with the replenishment of the depleted Pacific Fleet after the bombing of Pearl Harbor in 1942, but the theaters of the Second World War were distinct enough that there was not much subsequent need for the rapid redeployment of ships through Panama. The modern American navy has expanded to maintain its fleets throughout the world’s oceans, and our Nimitz- and Gerald R. Ford–class aircraft carriers are too large to pass through the canal’s locks.

The diminished military importance is likely what induced Jimmy Carter’s government to agree to hand the Canal Zone over to Panamanian control in 1977, with the ratification of the Torrijos–Carter Treaties. By 1999, the year assigned by the treaties to return the Canal Zone, the fall of the USSR and the end of the Cold War had left the U.S. confident in its hegemony, and control over the canal seemed irrelevant. Panama, like the rest of Latin America, went by the foreign policy wayside—without any potential challengers, what interests did the U.S. have left in the region?

Today, however, things look quite different. The U.S. faces a very dangerous adversary in the People’s Republic of China, which has been rapidly expanding its influence in Panama and elsewhere in Latin America. Various Chinese companies have established ports and other infrastructure projects on both sides of the canal, and, given the Chinese government’s policy of interference in corporate governance, it would be most surprising if those projects were not being used for some ulterior purposes.

Changes in the modern economic situation have also altered the importance of the Panama Canal. While it was less important than expected for American naval power, the canal has more than proven its worth in the expansion of American commerce. Six percent of all shipping in the world passes through the canal, including over 40 percent of all container shipping bound to or from the U.S., hundreds of millions of tons of American exports and imports. Globalization has made the American economy highly dependent on imports of goods and materials of all kinds, and supply chains have become ever-more sensitive to disruptions. Both Chinese interference and elevated transit prices from Panamanian authorities have the potential to materially harm American workers and consumers.

To what extent Trump is serious about repossessing the Panama Canal is an open question. Any real attempt at repossession would be chaotic and immensely destabilizing to the region, a repeat of the kind of short-sighted imperial overreach that created Panama in the first place. But Trump has identified a real, long-neglected American interest, and if he’s able to make the deals required to reduce Chinese influence and secure better terms for American shipping, it will be a triumph for his administration.

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