Trump threatens to reclaim Panama Canal over 'ridiculous' fees

Donald Trump suggested that his new administration could try to regain control of the Panama Canal that the United States “foolishly” ceded to its Central American ally, contending that shippers are charged "ridiculous" fees to pass through the vital transportation channel linking the Atlantic and Pacific Oceans.

Panama's conservative president José Raúl Mulino, who was elected in May on a pro-business platform, roundly rejected that notion as an affront to his country's sovereignty.

The Republican president-elect's comment on Sunday (local time) came during his first major rally since winning the White House on November 5. He also basked in his return to power as a large audience of conservatives cheered along. It was a display of party unity at odds with a just-concluded budget fight on Capitol Hill, where some GOP lawmakers openly defied their leader's demands.

Addressing supporters at Turning Point USA’s AmericaFest in Arizona, Trump pledged that his "dream team Cabinet" would deliver a booming economy, seal US borders and quickly settle wars in the Middle East and Ukraine.

"I can proudly proclaim that the Golden Age of America is upon us," Trump said.

"There’s a spirit that we have now that we didn’t have just a short while ago."

His appearance capped a four-day pep rally that drew more than 20,000 activists and projected an image of Republican cohesion despite the past week's turbulence in Washington with Trump pulling strings from his Mar-a-Lago resort in Florida as Congress worked to avoid a government shutdown heading into the holidays.

House Republicans spiked a bipartisan deal after Trump and Elon Musk, his billionaire ally, expressed their opposition on social media. Budget hawks flouted Trump's demand that they raise the nation’s debt ceiling, which would have spared some new rounds of the same fight after he takes office on January 20, with Republicans holding narrow control of the House and Senate. The final agreement did not address the issue and there was no shutdown.

Trump, in his remarks in Phoenix, did not mention the congressional drama, though he did reference Musk's growing power. To suggestions that "President Trump has ceded the presidency to Elon,” Trump made clear, “No, no. That’s not happening.”

“He’s not gonna be president,” Trump said.

The president-elect opened the speech by saying that "we want to try to bring everybody together. We’re going to try. We’re going to really give it a shot."

Then he suggested Democrats have “lost their confidence” and are “befuddled” after the election but eventually will ”come over to our side because we want to have them".

Renewed focus on key waterway

Atop a list of grievances — some old, some new — was the Panama Canal.

“We’re being ripped off at the Panama Canal,” he said, bemoaning that his country "foolishly gave it away".

The United States built the canal in the early 1900s as it looked for ways to facilitate the transit of commercial and military vessels between its coasts. Washington relinquished control of the waterway to Panama on December 31, 1999, under a treaty signed in 1977 by President Jimmy Carter.

The canal depends on reservoirs to operate its locks and was heavily affected by 2023 Central American droughts that forced it to substantially reduce the number of daily slots for crossing ships. With fewer ships using the canal each day, administrators also increased the fees that are charged all shippers for reserving a slot.

With weather returning to normal in the later months of this year, transit on the canal has normalised. But price increases are still expected for next year.

Mulino, Panama's president, has been described as a conservative populist who aligns with Trump on many issues. Panama is a strong US ally and the canal is crucial for its economy, generating about one-fifth of that government’s annual revenue.

Still, Trump said, that, once his second term is underway, "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 the United States of America, in full, quickly and without question.”

“I’m not going to stand for it," Trump said.

"So to the officials of Panama, please be guided accordingly.”

He did not explain how that would be possible.

Panama unlikely to readily cede canal

Shortly after Trump's speech, Mulino released a video declaring that "every square metre of the canal belongs to Panama and will continue to belong" to his country.

Without mentioning Trump by name, Mulino addressed Trump's complaints over rising fees for ships crossing the canal, saying they are set by experts who take into account operational costs, and supply and demand factors.

“The tariffs are not set on a whim,” Mulino said.

He noted that Panama has expanded the canal over the years to increase ship traffic “on its own initiative,” and added that shipping fee increases help pay for improvements.

“Panamanians may have different views on many issues” Mulino said.

“But when it comes to our canal, and our sovereignty, we will all unite under our Panamanian flag."