Panama Shuts Its Door to US and China: US Has to PAY for the CANAL!

the Panama Canal continues to be at the heart of global trade now it is about to turn into a field of competition between great Powers the rejection of the United States demand for free passage China's withdrawal from the belt and Road Project Trump's threat to take it back and shocking developments that will change the global balance so what is going on in the Panama Canal Alo Rubio is headed to the Panama Canal as part of his first international trip in this role State Marco Rubio has wrapped up his visit to Panama where he tored the

famous canal that handles up to 40% of the world's cargo traffic US Secretary of State Marco Rubio has told Panama's president Jose R Molino how did the United States go from wanting Panama to adopting a we will pay for the canal attitude why is Panama on the one hand refusing the United States free Passage through the canal and on the other hand surprisingly stopping its participation in China's belt and Road initiative let us take a look at the details Donald Trump's foreign policy priorities are coming into sharp Focus promoting Economic Security strengthening National Security and

sending a clear signal to America's allies and partners one of these Partners is Panama a small Central American country that controls one of the world's most vital sea passages built by the United States from 1904 to 1914 to to connect the Atlantic and Pacific Oceans the 82 km Panama Canal now handles about 6% of global Maritime trade and 40% of United States container trade underscoring its importance to both American interests and the global economy Australia which is heavily dependent on Maritime trade is particularly vulnerable to disruptions in global shipping routes although only a small portion

of Maritime trade passes through the Panama Canal disruptions to the Panama Canal will have an impact on the price of goods in Australia this is because the global supply chain would have to respond to the narrowing of another important waterway in its August 2024 monetary policy report the Central Bank noted that Maritime trade freight costs Rose sharply in 2024 this was predominantly a result of the conflict in the Red Sea and the reduced capacity of the Panama Canal due to Drought the central bank said that Rising freight costs have not yet translated into higher Goods

inflation in Australia but could if sustained demonstrating the impact of the disruption of Maritime trade on the Australian economy according to the Council on Foreign Relations the Panama Canal's connection between the Atlantic and Pacific Oceans greatly reduces the length of a cruise saving both time and money according to their estimates if a ship is traveling at 20 knots the time it would take to travel from San Francisco to New York would be at least 11 days if the ship used the Panama Canal in contrast if it did not use the canal and had to cross

the southern tip of South America it would take at least 27 days to complete the same route in addition more than 13,000 ships a year used the canal roughly 5 to 6% of total global trade according to the Council on Foreign Relations with 40% of total United States container traffic using the canal each year the United States is the largest user of the canal along with other major users such as China Chile Japan and South Korea so why is the Panama Canal so important to Donald Trump United States ships account for a significant part of

the Canal's traffic according to Canal authorities 52% of transits through the waterway in 2024 had origin or destination ports in the United States up to 14,000 ships use the canal each year to avoid a long and costly Journey to the tip of South America and while the Panama Canal remains important to trump it has also become an important and unexpected focus of his second Administration he has repeatedly expressed his intention to to take back control of the centuries old Waterway which he claims is operated by China China operates the Panama Canal which was not given

to China which was foolishly given to Panama Trump said in a statement but they violated the treaty and we are going to take it back or something very strong will happen Rubio told Molino and Panamanian foreign minister Javier Martinez acha that Trump views China's influence in the now as a threat and potential violation of a United States Panama agreement that among other things makes the canal permanently neutral and internationally accessible secretary Rubio has made clear that this status quo is unacceptable and absent immediate changes will require the United States to take the necessary measures to

protect its rights under the treaty State Department spokeswoman Tammy Bruce said in a statement the plan was strongly rejected by Molino who said the key trade route is and will remain in the country's hands he also rejected Trump's claims about China's influence saying that there is no nation in the world that interferes with our governance Trump reiterated his claim although he said he was not happy with the situation he acknowledged that Panama had acknowledged some things but does China really control the Panama Canal as the United States claims there is is no evidence of this

when Panama gained full control over the canal its operation came under the control of the Panama Canal Authority an independent government agency however China's presence and investment in the canal has increased it is reported to be the second largest user of the Panama Canal after the United States representing 21.4% of the Canal's cargo volume between October 2023 and September 2024 Hutcherson Holdings a subsidiary of Hong Kong based conglomerate CK has operated two ports on the canal since 1997 one on the Atlantic side and one on the Pacific side but access to the canal is not

controlled by the company China and Panama have developed closer ties in recent years with Panama withdrawing diplomatic recognition of Taiwan and EST establishing relations with China in 2017 Panama subsequently joined China's belt and Road initiative an overseas infrastructure and investment initiative funded by China that gives Beijing a foothold in foreign markets and expands its global economic reach however Molino announced that Panama the first Latin American country would not renew its agreement with the initiative is Trump right to worry about China's influence in in the Panama Canal while his claims are demonstrably false his underlying concern

is not unwarranted Maritime infrastructure is crucial to the economic and National Security of countries like Australia and the United States Australia learned this lesson too late when it hastily leased the port of Darwin to landbridge a chines owned company for 99 years in 2015 as vital as dark is to Australia's security the Panama Canal remains critical to America's security since 1999 the canal has been wholly owned by the Republic of Panama however the United States has seeded control under two treaties that require the canal to remain neutral reserving the right to defend it with military

force otherwise despite the canal being under Panamanian control companies from mainland China and Hong Kong have acquired important Port facilities at both the Pacific and Atlantic entrances China's national security laws may require companies including Hong Kong companies to assist the Chinese government in intelligence gathering and military operations this means that while China does not directly control the Panama Canal it still has significant influence at both the Pacific and Atlantic entrances coupled with the massive increase in Chinese investment in Panama underscored by Panama's decision to join China's belt and Road initiative in 2018 this port ownership

gives China a strategic foothold in the region and especially at both ends of the canal Secretary of State Marco Rubio has called on Panama to end the Chinese Communist party's influence over the Canal Zone The Canal area is part of a broader trend of Chinese investment in Maritime trade routes including in the Indian Ocean Think Bangladesh Sri Lanka and Pakistan this foothold gives China significant influence over the straight of malaka the straight of hormo and other vital shipping routes in the region China has poured resources into Pacific ports such as those in the Solomon Islands

the point is that China is investing heavily in infrastructure that supports Global Maritime trade under National Security laws companies making these Investments some of which are state-owned or have close ties to the Communist Party could be forced to use them for intelligence gathering and even military purposes in the event of increased strategic rivalry or conflict these Investments would allow for the targeted contraction of Maritime trade to countries like the United States and Australia despite Trump's threats it is unlikely that the United States would choose to seize the canal by force but Australia should take note

while Trump's claims about Chinese soldiers controlling the Panama Canal are false China's increasing control over Port infrastructure globally including at both ends of the canal should be a concern for a maritime trading Nation like Australia so how has Panama responded to United States claims over free Canal Transit Panama accuses the United States of pedling Intolerable lies about the canal president Jose Raul Molino has refused to conclude an agreement that United States ships can pass through the canal for free Molino accused the United States of selling quite simply an intolerable lie about the Panama Canal as

Donald Trump's promise to take back the Waterway continues to poison relations between the two countries and cause alarm in Latin America Panama has refused to make changes to allow United States government ships to pass through the Panama Canal free of charge after the White House claimed it had agreed to such a move the state department said government ships can now Transit the Panama Canal without paying fees saving the United States government millions of dollars a year the Panama Canal Authority added that it has the authority to set tolls and other charges for Transit through the

canal and does not make any adjustments to them the dispute flared 4 days after Trump repeated the B baseless claim that the United States foolishly in 1999 returned the United States built Canal to Panamanian control only in exchange for its seizure by China and we are going to get it back or something very powerful will happen Trump warned in a statement Rubio told Molino that Trump believes the Chinese Communist party's current position of influence and control over the Panama Canal Zone is a threat to the canal and unacceptable according to the state department without immediate

changes it will require the United States to take the necessary measures to protect its rights Rubio said responding to the comments Rubio said the United States has a treaty obligation to protect the Panama Canal in case it is attacked this treaty obligation must be enforced by the Armed Forces of the United States in particular the United States Navy I find it absurd that we should have have to pay a fee to Transit an area that we have an obligation to protect in time of conflict most analysts believe that United States military action to retake the

canal by force is unlikely although George HW Bush's 1989 Invasion to overthrow Panama's dictator Manuel Nora was not impossible one of the main motivations behind Trump's rhetoric appears to be to pressure Panama and other countries in Latin America and the Caribbean to slow China's economic pressure on a region the United States has long considered its backyard Panama withdraws belt and Road agreement with China after United States pressure can Trump's anti-china strategy work Panama's president announced that his country's diplomats have informed their Chinese counterparts that the Central American country is ending its participation in China's belt

and Road initiative the plan is a trillion dooll development campaign in which China's leader xiin ping hopes to boost economic growth around the world by building massive amounts of infrastructure from railroads in Thailand and Ethiopia to a recently opened megaport in Peru China for its part blames United States sabotage for Panama's withdrawal from the belt and Road initiative Chinese foreign Ministry spokesperson ly Gian condemned the United States for making irresponsible statements on the Panama Canal issue and deliberately distorting attacking and mischaracterizing relevant cooperation he said China opposes the United States defaming and sabotaging the belt

and Road initiative in Panama through pressure and coercion a Ministry spokesman ly Jan said China deeply regrets Panama's decision we hope Panama will make the right decision based on the overall situation of bilateral relations and the long-term interests of the two peoples and eliminate foreign interference he said Lynn said more than 20 Latin American countries are among more than 150 countries participating in the belt and Road initiative and the results have benefited their people Donald Trump's presidency in the United States has brought about the most radical changes in the international political and economic arena in

the last century Donald Trump set out on this path with the make America great again strategy targeting both countries close to him and actors he sees as his rivals on February 1 2025 president Trump issued three executive orders ordering the United States to impose new tariffs on imports from Canada Mexico and China which will take effect on February 4 2025 the executive orders included an additional 25% ADV valorum tariff on imports from Canada and Mexico and a 10% tariff on imports from China these tariffs would apply to All Imports except Canadian energy resource exports which

would face a 10% tariff the tariffs would have been in effect for goods entered into consumption or withdrawn from storage for consumption on or after 00001 East Eastern Standard Time on February 4 2025 Goods in transit to the United States were Exempted from the tariffs the day before Trump issued his executive orders the tariffs imposed on Canada and Mexico were met with concern by experts in terms of global economic balances the tariffs on China were seen as the cornerstones of us leader Donald Trump's expected strategy in other words it was no surprise that Trump targeted

Beijing through economic channels additional tariffs on imports from China were set at 10% ADV valorum the new tariffs will be in addition to other duties fees charges deductions and costs imposed on covered Imports the additional tariffs appear to apply only to products classified as originating from the People's Republic of China there is no indication in the executive order that the duties will apply to Goods originating in Hong Kong or maau this of course did not sit well with China officials in Beijing have argued that us leader Donald Trump is not really targeting China but the

world economy according to economists Trump was trying to curb China's growing superpower status Donald Trump had not only Beijing on his radar but also the Moscow regime which he sees as a supporter of Russia for the US leader the Russian Wing was probably also seen as a major risk factor in particular the war in Ukraine was one of the issues that bothered Trump the EU and US sanctions against Russia were already Weighing on Kremlin leader Vladimir Putin but Donald Trump wanted more to further weaken the common alliance between Russia and China in order to stop

the deterrence of China and Russia Donald Trump has deployed other strategies besides tariffs yet with China's growing presence and Washington's concerns about potential violations of that neutrality the tension surrounding the Panama Canal continues to rise as Molino stands firm in denying any external control over the canal Trump's Administration shows no signs of relenting on what it sees as a national security issue the question remains will Panama manage to maintain its sovereignty and balance Regional power interests or will the United States take further measures to assert its influence the coming days will reveal whether these competing

Visions for the canal lead to a new chapter in global trade or a flash point in the ever evolving rivalry among the world's great Powers since winning the 2024 presidential election President Donald Trump has made it clear that he wants the United States to take back control of the Panama Canal this canal is a strategic waterway that was transferred to Panama in 1999 under the 1977 teros Carter treaties these treaties were designed to guarantee the Canal's neutrality and guarantee that it would remain open to ships of all Nations under non-discriminatory tolls however the US retained

the right to intervene militarily if the Canal's neutrality or functioning was threatened this Clause has become the focus of recent tensions China's expanding influence over the Panama Canal has come under US radar the Trump Administration has argued that the Chinese presence also poses a significant threat to US National Security in this context the US wanted to increase its dominance over Panama however some argued that there were economic reasons behind the US pressure on Panama in fact the proponents of this idea were not wrong the Panama Canal is used to shorten the length and duration of

ocean voyages between the North Atlantic countries and the North and South Pacific countries the shorter time also reduces costs considerably these reasons influence Mr Trump's view of Panama and the president wants complete control of the Panama Canal but the Panamanian presidency does not share Mr Trump's view in fact president Jose Raul Molino does not allow us ships to pass through the Panama Canal for free so will Donald Trump push for free Passage through the Panama Canal again what does the future of the Panama Canal hold while President Molino seeks to balance economic opportunities with national

sovereignty Donald Trump's insistence on reasserting American dominance coupled with concerns over China's Regional Ambitions adds yet another layer of complexity whether the United States will fill the vacuum left by beij withdrawal remains to be seen and the broader question lingers can Panama maintain its neutrality and control over the canal without sparking greater conflict between Global powers only time will tell if this critical Waterway can remain a conduit for international trade or become the centerpiece of an escalating geopolitical rivalry do not forget to share your views in the comments thank you for watching us