Panama Canal controversy may deepen strain in US-China relations

President-elect Donald Trump has set global nerves on edge with a trifecta of venturous provocations — musing about purchasing Greenland, reclaiming the Panama Canal and annexing Canada, even in jest. Delivered through a blend of social media flair and public bluster, these remarks blur the line between calculated strategy and impetuous theatrics.

With his return to the Oval Office nearing, Trump’s comments echo the unpredictability that defined his prior tenure. His statements have rattled allies and adversaries alike, forcing world leaders to parse his true intentions while bracing for potential fallout. This rhetoric reflects a broader trend of disruption at the core of Trump’s foreign policy ethos. By injecting ambiguity into U.S. positions on sovereignty and strategic assets, Trump is challenging established norms and unsettling traditional alliances.

Whether deliberate posturing or habitual attention-seeking, these remarks presage a foreign policy defined by turbulence and recalibration of American priorities.

On Dec. 21, Trump fired a broadside on his social media platform, Truth Social, decrying Panama’s tolls for using the canal as “ridiculous” and warning of a potential Chinese foothold in the region. In his signature style, he suggested a drastic remedy: If Panama failed to address these perceived issues through reforms, the United States would demand the Panama Canal’s “return, fully and unconditionally.”

The rhetoric further escalated when Trump doubled down the following day during a fiery rally in Arizona. His words were accompanied by a striking visual — an image of the canal, overlaid with an American flag seemingly rising from its waters. Beneath the photo, a caption proclaimed: “Welcome to the United States Canal.” Trump emphasized that he would not let the canal fall into the "wrong hands," alluding to China's growing influence in the region. 

It was vintage Trump: hyperbolic, theatrical and designed to captivate. Yet, as his words rippled across global corridors of power, one question has emerged — Was this calculated rhetoric or a prelude to diplomatic disruption? Only time, and Trump’s next headline, will tell.

This episode has not only ruffled feathers in Central America but also set the stage for a potential new conflict with China. Trump's remarks, made in the run-up to his second presidential tenure, emphasized that “It was solely for Panama to manage, not China, or anyone else. We would and will NEVER let it fall into the wrong hands!” 

Panama's president, José Raúl Mulino, quickly responded, rejecting Trump's claims and noting the country's sovereignty over the canal. Mulino dismissed the notion that Panama's fees were inflated and reiterated that "every square meter of the Panama Canal and its adjacent zones is part of Panama, and it will continue to be."

Similarly, Chinese foreign ministry also retorted with a blunt response: "The Panama Canal is a great creation of the Panamanian people, and China has always supported their just struggle to maintain sovereignty over Panama Canal.” China is the second-largest user of the Panama Canal after the U.S., and its investments in Panama's ports and infrastructure have grown significantly in recent years. 

China doesn’t control the Panama Canal, but the narrative grows murkier. Since 1997, CK Hutchison Holdings, a Hong Kong-based firm, has managed key ports at the canal’s Caribbean and Pacific gateways. This arrangement fuels broader concerns about China’s expanding global influence, though direct control of the canal remains firmly with Panama. This has raised concerns in Washington about Beijing's strategic ambitions in the Western Hemisphere.

Over the years, China's Belt and Road Initiative (BRI) has seen significant Chinese involvement in Latin America. Panama, with its strategic location and the canal, is a key node in this initiative. Chinese companies have invested heavily in Panamanian ports, and there are fears that Beijing could leverage its economic influence to gain strategic advantages.

Trump's remarks have the potential to escalate tensions between the U.S. and China. By framing the issue in terms of sovereignty and economic fairness, Trump is tapping into nationalist sentiments that resonate with his base. However, this rhetoric also risks provoking a strong response from China, which is unlikely to take kindly to any perceived threats to its interests in Panama.

So far, China's response to Trump's comments has been measured, but it may turn bitter if Trump keeps on pushing for the canal issue. For obvious reasons, any move by the U.S. to reclaim control of the canal could be seen as a direct challenge to China's influence in the region.

Trump's remarks about the Panama Canal are part of a broader pattern of his foreign policy rhetoric, which often stresses American sovereignty and economic interests. This approach has resonated with many of his supporters but has also led to tensions with allies and adversaries alike. In the context of U.S.-China relations, the Panama Canal issue is likely to be another point of contention in an already complex and fraught relationship.

The U.S. and China are engaged in a strategic competition that spans multiple domains, from trade and technology to military and geopolitical influence. The canal, with its strategic importance and symbolic value, is a natural focal point for this competition. Throughout his political career, Trump has been vocal about his concerns regarding China's influence and actions on the global stage.

His rhetoric often framed China as a strategic competitor that needed to be countered to protect American jobs and industries. This stance has continued, with promises of even higher tariffs and tougher measures against Beijing in his second term.

By highlighting China's investments in Panama and suggesting that the U.S. should reclaim control of the canal, Trump is signaling a willingness to confront Beijing on multiple fronts. While the immediate impact of his remarks may be limited, they have the potential to ignite new tensions with China and complicate an already complex geopolitical landscape.

Imran Khalid is a physician and has a master’s degree in international relations.