In his inaugural address, Donald Trump declared that one of his administration’s priorities would be to regain control of the Panama Canal. This claim reopens a century-old debate over who built it, who lost it, and who truly owns this 80-kilometer engineering marvel that stitches together the Atlantic and Pacific Oceans. With over 140 maritime routes, 1,700 ports, and 160 countries linked through it, the Canal is a key artery of global trade.
I visited the Canal a few years ago, and, beyond its logistical genius, what struck me the most was its turbulent history.
French vision, American execution, Caribbean workers
In 1869, fresh off his success with the Suez Canal, French diplomat Ferdinand de Lesseps set his sights on Central America. He was determined to carve a passage through the Isthmus of Darien, which was then part of Colombia.
This would be one of the 19th century’s most ambitious infrastructure projects.
A report in The Economist from 1879 called it “a bolder enterprise even than the Suez Canal,” predicting the logistical, technical, and health nightmares ahead. As if they had a crystal ball, the project collapsed just a decade later, sunk by financial ruin, yellow fever, and an engineering failure. Lesseps’s Panama Canal Company would be bankrupt by 1888.
Yet where the French had failed, the United States saw an opportunity. Invoking the Monroe Doctrine—a US foreign policy that justified American influence in Latin America while keeping the continent off-limits to European colonial ambitions—Washington backed Panama’s independence from Colombia in 1903. It then secured the Hay-Bunau-Varilla Treaty granting it full control over the Canal’s construction and operation. Nearly 40,000 workers from the Caribbean—mostly from Barbados—were recruited to build the Canal. And in August 1914, just as World War I erupted, the Panama Canal opened, redrawing the map of global trade.
Without the Canal, global shipping routes would be significantly different. Before 1914, ships traveling the east and west coasts of the American Continent faced a long and dangerous journey. The Canal slashed fuel consumption, cut transit times, and made global trade more efficient than ever.
Today, a San-Francisco–New-York voyage has five possible routes by sea. The fastest? Through the Panama Canal—10 days, 23 hours. The next-best option? A 27-day detour around the Strait of Magellan.
The canal moves the world… but at what cost?
For much of the 20th century, the Panama Canal was a geopolitical chess piece. The Canal Zone was US territory and a flashpoint for anticolonial sentiment in Central America. By the 1960s and ’70s, Panamanian resentment escalated, culminating in the 1964 Flag Riots. Clashes between Panamanians and US forces resulted in multiple casualties.
In 1977, the Torrijos-Carter Treaties established a phased transition plan that transferred control of the Canal to Panama by 1999, marking a major shift in US-Panama relations. Trump has called this handover “foolish,” blaming President Jimmy Carter for giving away a trade goldmine. At the time, the decision was intended to reduce anti-American sentiment in Latin America.
Today, the Panama Canal is a vital economic force. Managed by a private entity, it generates roughly 4% of Panama’s GDP, through the tolls paid by vessels using the Canal. About 5% of global trade flows through it annually, and the US is its biggest user—around 40% of US container traffic passes through each year.
Meanwhile, China is catching up fast. From October 2023 to September 2024, China accounted for 21.4% of the cargo volume transiting the Canal—making it the second largest user after the United States. Beijing has also been investing in Panamanian ports, raising concerns over who has more influence.
And the stakes are rising…
Water shortages in Lake Gatun (one of the lakes that feed the Canal) restrict ship crossings and raise questions about the Canal’s long-term viability, as does the fact that the century-old locks are not big enough to accommodate today’s largest container ships. All the while, Nicaragua is reviving dreams of an alternative Canal, backed by Chinese investors.