Too Expensive, Says Donald Trump

Donald Trump Criticizes Panama for Charging High Fees for U.S. Ships Using the Panama Canal

Photo credit: MercoPress.

Donald Trump, the next U.S. president, criticized Panama on Saturday for charging high fees for U.S. ships using the Panama Canal. He suggested the U.S. might demand control of the canal again.

Trump also pointed out China’s growing influence near the canal, which he said could harm U.S. businesses that rely on it to move goods between the Atlantic and Pacific.

“Our Navy and businesses are being treated unfairly. The fees are ridiculous,” Trump posted on Truth Social. “This scam against our country must stop now.”

The Panama Canal was built by the U.S. in 1914 but was handed over to Panama in 1999 under a 1977 agreement signed by President Jimmy Carter, which Trump said was a foolish decision.

The U.S. uses the Panama Canal more than any other country.

“When President Jimmy Carter foolishly gave it away, for One Dollar, during his term in Office, it was solely for Panama to manage, not China, or anyone else,” he stated. “It was likewise not given for Panama to charge the United States, its Navy, and corporations, doing business within our Country, exorbitant prices and rates of passage.”

Trump insisted the canal should only be controlled by Panama and not by other countries like China. He added that if Panama can’t manage the canal properly, the U.S. will demand its return.

The original treaty clarified that Panama would keep the Canal neutral and allow shipping from all nations to use it.

China does not directly control the Panama Canal, but it has significant economic influence through contracts and investments in Panama, particularly in ports and logistics near the canal. Here’s how:

Port Operations: Chinese companies, such as COSCO Shipping and Landbridge Group, have obtained leases to operate key ports near the canal, such as the Port of Balboa and the Port of Cristóbal. These ports play a crucial role in canal-related logistics and shipping.

Infrastructure Investment: China has invested in infrastructure projects in Panama, enhancing its strategic presence in the region. This includes logistics facilities, free trade zones, and transportation networks.

Diplomatic Relations: In 2017, Panama switched its diplomatic recognition from Taiwan to China. This has led to strengthened economic ties and increased Chinese influence in Panama.

Belt and Road Initiative: Panama has joined China’s Belt and Road Initiative, which promotes infrastructure development and trade connectivity. This relationship enhances China’s leverage over Panama’s economy.

At the time of the treaty the Panama Canal was seeing declining use. It cannot take the largest ships and shipping is restricted to the so-called Panamax size ships, whose dimensions are the largest that can pass through the canal.

Larger ships can travel round Cape Horn, but this takes a lot more time and uses a lot more fuel. Ships from Asia can also use the Suez Canal and pass though the Mediterranean and thus avoid having to go round Africa.

One of Trump’s grievances appears to be that it is expensive for US naval ships to use the Panama Canal to move from the Pacific Coast to the Caribbean.

Panama has not responded to Trump’s comments.

Although Trump will officially become president next month, he has already been influencing politics before President Biden’s term ends. During his campaign, Trump said his business experience makes him the right person to protect U.S. economic interests.

The Panama Canal is vital for global shipping, as about 5% of the world’s maritime traffic passes through it. It helps ships avoid the dangerous sea route around the tip of South America known as the ‘roaring forties”.

Other major users of the Panana Canal include the U.S., China, Japan, and South Korea. Goods from Asia that are bound for Caribbean destinations also pass through the Panama Canal.

The Panama Canal is owned and operated by the Republic of Panama.

It was handed over to Panama on December 31, 1999, as part of the Torrijos-Carter Treaties signed in 1977 between Panama and the United States. The canal is managed by the Panama Canal Authority (ACP), a Panamanian government agency responsible for its administration, operation, and maintenance.

Last year, the Panama Canal earned record revenue of nearly $5 billion, however drought conditions have somewhat impeded the operation of the Canal at times, as there has not been enough water in reservoirs to operate the locks that lift shifts over the mountains at full capacity.

If the United States took control of the Panama Canal and reduced shipping fees, the impact on Caribbean economies would likely vary depending on their reliance on maritime trade and canal-related activities. Here are some possible effects:

Lower Shipping Costs: Reduced canal fees could lower transportation costs for goods moving to and from the Caribbean, making imports cheaper and exports more competitive.

Increased Trade Opportunities: Lower costs might encourage more trade between Caribbean nations and major global markets like the U.S., Asia, and Europe.

Conclusion

Donald Trump’s criticism of Panama’s management of the Panama Canal highlights the complex issues surrounding the canal’s operation and control. While Trump suggests the U.S. should take control of the canal again, it is unclear what benefits this would bring or how it would address the concerns he has raised.

FAQs

Q: What is the Panama Canal?
A: The Panama Canal is a 50-mile (80 km) long shipping canal that connects the Atlantic Ocean to the Pacific Ocean, allowing ships to pass through Central America.

Q: Who built the Panama Canal?
A: The Panama Canal was built by the United States between 1904 and 1914.

Q: Who currently manages the Panama Canal?
A: The Panama Canal is currently managed by the Panama Canal Authority (ACP), a Panamanian government agency.

Q: What are the concerns raised by Donald Trump about the Panama Canal?
A: Trump has raised concerns about the high fees charged by Panama for U.S. ships using the canal and the growing influence of China in the region.