On Sunday, US President-elect Donald Trump said his new administration would seek to regain control of the Panama Canal.

His statements were rebuked by Panamanian President Jose Raul Mulino.

Here’s more on what Trump said and why the Panama Canal matters to the US:

What did Trump say?

Trump brought up the Panama Canal at AmericaFest, an annual event hosted by the conservative group Turning Point.

“We are being ripped off at the Panama Canal, just like we are being ripped off everywhere else,” he said at the event in Arizona, adding that the US had “foolishly given it away.”

Following AmericaFest, Trump posted on his Truth Social platform an image of the US flag flying over a narrow body of water with the caption: “Welcome to the United States Channel!”

After Trump’s statement, he and Panamanian President Mulino had an argument.

“Every square meter of the Panama Canal and the surrounding area belongs to Panama and will continue to belong (to Panama),” Mulino said in a recorded statement posted on his X account.

Trump posted a news article about Mulino’s statement on his Truth Social platform with the headline: “We’ll see.”

On Saturday, Trump also pointed to China’s growing influence over the Panama Canal in a Truth Social post. “The sole responsibility lay with Panama, not China or anyone else,” he wrote. “We would and will NEVER let it fall into the wrong hands!”

China does not control the canal. However, CK Hutchison Holdings, a Hong Kong-based company, has operated two of the canal’s ports, located at the entrances to the Caribbean and the Pacific, since 1997.

In his Sunday statement on X, Mulino also said that China has no influence over the Panama Canal.

What is the dispute about?

The Panama Canal is an artificial water passage on the Isthmus of Panama that connects the Pacific Ocean with the Atlantic Ocean.

Up to 14,000 ships travel the canal every year. The waterway accounts for an estimated 2.5 percent of global maritime trade and 40 percent of all U.S. container traffic.

The canal is crucial for the US to import goods from Asia. The U.S. also uses the waterway to export goods, including liquefied natural gas.

Who built the canal?

The canal was built primarily by the United States between 1904 and 1914, with then-President Theodore Roosevelt overseeing construction.

Who does it belong to?

The canal belongs to the government of Panama.

When did Panama become the owner?
On December 31, 1999, the United States transferred ownership of the canal to Panama under a treaty signed in 1977 by then-President Jimmy Carter.

“If the moral and legal principles of this generous gesture of giving are not followed, we will demand that the Panama Canal be returned to the United States of America in full, quickly and without questions,” Trump said.

The president-elect gave no further details about how this would be possible.

Is the canal drying out?

In 2023, drought conditions in Central America impacted the Panama Canal.

The canal relies on the nearby artificial Gatun Lake to operate its locks. Due to low water levels in the lake, canal authorities limited the number of ships using the waterway and increased user fees.

In the last fiscal year, the Panama Canal recorded a 29 percent decline in ship numbers. Between October 2023 and September 2024, 9,944 people crossed the Channel, compared to 14,080 the previous year.

Traffic on the canal has now returned to pre-drought levels. However, the fee is expected to increase next year.

In his statement, Mulino said that “the tariffs are not set on a whim,” adding that the increased shipping fees will help finance improvements the government of Panama has made to allow more shipping traffic through the canal to enable.

What did Trump propose?

In the run-up to the November vote, Trump’s presidential campaign was based on the non-interventionist “America First” policy. However, he has proposed “territorial expansion” several times since taking office, with the Panama Canal being one of the areas he recently flagged as a possibility.

Trump also hinted at Canada. On December 18, he posted on TruthSocial: “Many Canadians want Canada to become the 51st country. They would save massively on taxes and military protection. I think it’s a great idea. 51st state!!!”

It’s unclear whether the president-elect was serious. His comments came amid rising tensions between the United States and Canada. After Trump recently threatened to impose tariffs on goods from the northern neighbor, Canadian Finance Minister Chrystia Freeland resigned and pressure mounted on Prime Minister Justin Trudeau to resign.

Trump has also expressed interest in Greenland, an autonomous territory of Denmark. On Monday, Trump announced on Truth Social that he had chosen Ken Howery as U.S. ambassador to Denmark, adding to that post: “The United States of America believes that ownership and control of Greenland is an absolute necessity are.”

Trump also made this suggestion during his first term in office, but was rebuffed by the Danish authorities, with the Danish prime minister telling the Danish media that Greenland was not for sale.