The Panama Canal has unexpectedly emerged as a focal point in Donald Trump’s foreign policy, with the former president alleging that China is exerting excessive influence over this crucial waterway and even suggesting the US might “take back” control of it. The Panamanian government has strongly dismissed these claims. Nonetheless, discussions with US Secretary of State Marco Rubio led Panama’s President, José Raúl Mulino, to withdraw from China’s Belt and Road Initiative.
Opened in 1914, the Panama Canal has significantly shortened travel times for maritime trade, facilitating around 6% of global maritime commerce today. Despite Trump’s criticisms regarding perceived exorbitant tolls faced by the US, experts argue that his concerns are misplaced but highlight legitimate worries about China’s growing influence, particularly through companies controlling key ports at both ends of the canal.
While Australia’s trade via the canal is minimal, disruptions could elevate goods prices domestically, reminiscent of the recent hiking costs due to other maritime disruptions. The situation underscores the broader implications of Chinese investment in global infrastructure, which can impact trade dynamics significantly, even in regions far removed from direct trade routes.