The Panama Canal is facing significant challenges, primarily due to extreme weather conditions and geopolitical tensions related to President Trump’s trade war with China. The El Niño phenomenon and severe drought have already impacted water levels, but now, Trump’s 145% tariffs on Chinese goods are threatening the canal’s vital role as a shipping hub. Each year, about 40% of U.S. container traffic, valued at approximately $270 billion, passes through the canal, making it a critical artery for goods headed to the U.S. East Coast.
The trade war has led to a drastic decline in manufacturing orders from China, resulting in a 300% increase in blank sailings—cancelled voyages—from China to the U.S. since Trump’s tariffs were announced. This has affected not just West Coast ports but is also expected to impact East Coast ports, thereby reducing the number of shipping containers and vessels transiting through the canal, which directly affects revenue.
Despite these challenges, the Panama Canal Authority reported a revenue of $3.38 billion last year, with increases since 2017. Boris Moreno from the Canal Authority highlighted that any global or U.S. recession has potential repercussions for the canal due to its reliance on U.S. cargo, which constitutes approximately 75% of its business.
Additionally, amid accusations from Trump regarding Chinese control over key ports and high toll rates, Panama’s government has denied these claims and emphasized the canal’s commitment to neutrality. Secretary of State Marco Rubio and Secretary of Defense Pete Hegseth have visited Panamanian officials, reflecting rising tensions regarding U.S. influence in the region. Meanwhile, U.S. firm BlackRock is attempting to secure investments in ports connected to the canal, though the deal’s future remains uncertain.
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