‘We’re taking it back!’: Donald Trump’s Panama Canal dreams hit a snag as China moves in

A major proposed deal involving dozens of international ports, including two key ones at the Panama Canal, has stalled. This could open the door for China to increase its influence over the important waterway. The situation comes after President Donald Trump previously spoke about reducing Chinese control over the canal and even suggested the U.S. should reclaim it.

The original agreement, worth $23 billion, was meant to transfer ownership of 43 ports across 23 countries to a group that included the U.S. investment firm BlackRock. At the center of the deal were two Panamanian ports, Balboa and Cristobal, located at opposite ends of the Panama Canal. These ports have been run by Hong Kong’s CK Hutchison since 1997. The company is part of the business empire of Li Ka-shing, Hong Kong’s richest person.

Fox News reported that the U.S. president initially supported the deal, as he had previously wanted to reduce China’s role in the canal’s operations and even talked about the U.S. “taking back” the crucial waterway. However, China quickly opposed the proposed deal. It pushed for its state-owned shipping company, Cosco, to be included in the transaction.

China won’t give up the Panama Canal so easily

Facing growing pressure from China, including threats of an anti-monopoly investigation, CK Hutchison announced that the exclusive negotiation period with BlackRock had ended. Even though this window closed, the company said it was still open to reworking the deal. It expressed a willingness to keep talking, with the goal of bringing in a major strategic investor from China to join the group as a key player.

According to CK Hutchison, the company will “remain open to discussions with a view to inviting a major strategic investor from the [People’s Republic of China] to join as a significant member of the consortium.” Changes in deal structure and participant makeup are necessary to get any approval from “all relevant authorities,” like China.

The history of the Panama Canal shows the long-standing U.S. connection to it. The U.S. finished building the canal in 1914. Control of the waterway was later handed over to Panama in 1999, following a treaty signed in 1977 under President Jimmy Carter. China’s growing involvement in Latin American infrastructure has been a concern for U.S. leaders across the political spectrum. Still, Donald Trump stood out as the first modern U.S. president to openly suggest retaking the Panama Canal. He recently claimed, “China is operating the Panama Canal, and we didn’t give it to China—we gave it to Panama—and we’re taking it back.”

Trump’s claims make it seem like the U.S. has a choice in the matter. However, China hasn’t been swayed by any threats, and even doesn’t get scared over the go-to tariff promises that end up being negotiated down.

An analysis by Dane Chamorro, head of Global Risk Analysis at Control Risks, suggests that China might end up being left out of the Panamanian port holdings while gaining control over most of the other assets in the larger deal. Chamorro believes China would likely demand a trade-off: Cosco’s involvement in the other global ports.

Since Cosco is already a major global port operator, this move could make it the biggest port owner and operator in the world. This would fit with China’s position as the world’s top trading economy, manufacturing economy, and shipbuilder. Chamorro also pointed out that U.S. companies don’t operate on the same global scale in the port industry as Chinese, Hong Kong, or Singaporean firms do.