Explained: Why is Trump so obsessed with taking Panama Canal back? Is it essential for US?

US President Donald Trump once again showed his determination to take control of the Panama Canal in his presidency and vowed the same in his inaugural speech on Monday (Jan 20). Despite the constant clarification by the Panama government that there is no Chinese interference in its operation, Trump claimed that "China is operating the Panama Canal".

He added that the US did not give the canal to China but to Panama, and now Trump is "taking it back." The newly elected president said the US has been “treated very badly by this foolish gift that should have never been made."

Add WION as a Preferred Source

It all started in 1880, a French company that was owned by one of the builders of the Suezaa Canal started constructing across the Isthmus of Panama (Which was a part of Columbia at that time). But after the death of around 22,000 workers due to various tropical diseases like yellow fever and the company going bankrupt, the project was sold to the US in 1902 for $40 million.

In 1903, Panama declared independence from Colombia. It was a result of a US-backed revolution. After the independence, Panama signed a treaty with the US, the Hay-Bunau-Varilla Treaty. As per the agreement, the US had to pay $10 million to Panama for a perpetual lease on land for the Panama Canal. The US also had to pay $250,000 to the other country in annual rent. In 1913, the canal was ready with a cost of $375 million.

In 1977, then-US President Jimmy Carter and Panama’s General Omar Torrijos signed two new treaties, which replaced the 1903 treaty. The newly signed agreements gave America the right to defend the Panama Canal against any threat.

As per the Carter-Torrijos treaties, the US officially handed over the control of the Panama Canal to Panamanians in 1999. And since then the canal has been controlled by Panama.

The 82 km long canal is one of the most iconic pieces of infrastructure in the world. It eliminates the need for ships to cover around 7,800 miles.

America is the biggest user of the Panama Canal as it was accountable for around 75 per cent of the traffic in the fiscal year 2024. The second position is held by China as it has 21 per cent Canal traffic.

By the end of 2020, the Panama Canal had $3.4 billion in revenues. After the global pandemic of COVID-19, the revenue experienced a dip.

(With inputs from agencies)