Panama turned its canal into a money-maker. History shows why Trump’s threats are sounding the alarm bells

More than 100 years after the construction of the engineering marvel that linked the Atlantic and Pacific oceans — and 25 years after the canal was returned to Panama by the US — the Panama Canal faces renewed intimidation from US President Donald Trump.

Born from “gunboat diplomacy,” the Panama Canal is under threat from US saber rattling once again. More than 100 years after the construction of the engineering marvel that linked the Atlantic and Pacific oceans – and 25 years after the canal was returned to Panama by the US – the waterway faces renewed intimidation from an American president. US President Donald Trump in his inaugural address on Monday vowed to wrest the canal back. “We have been treated very badly from this foolish gift that should have never been made and Panama’s promise to us been broken,” Trump said, claiming that Panama overcharges the US Navy to transit the canal. “Above all China is operating the Panama Canal,” Trump also said, a frequent claim he has made without providing any evidence. “And we didn’t give it to China, we gave it to Panama and we are taking it back!” Panamanian officials have scoffed at Trump’s latest claims that the country charges too much for ships to transit the canal or that China secretly has taken control of the waterway. Still, his threats are not taken idly by Panamanians who consider the canal to be central to their national identity and depend on lucrative canal traffic. In 2024, the canal earned nearly $5 billion in total profits. According to a study released in December by IDB Invest, 23.6% of Panama’s annual income is generated from the canal and companies that provide services related to the canal’s operations.