While the trade war with China plays out, another war of political rhetoric is heating up again over the Panama Canal.
Defense Secretary Pete Hegseth was in Panama this week, and pointed out America’s military presence and joint training exercises with Panamanians. Though he said the U.S. doesn’t seek war and that “war with China is certainly not inevitable,” he had a strong military message for the CCP:
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Our relationship is growing in part to meet communist China’s rising challenge. China-based companies continue to control critical infrastructure in the canal area that gives China the potential to conduct surveillance activities across Panama. This makes Panama and the United States less secure, less prosperous, and less sovereign.
He said “China will not weaponize this canal,” and it will stay that way “through the deterrent power of the strongest, most effective, and most lethal fighting force in the world.”
Hegseth followed up Wednesday with a similar message to the Central American Security Conference.
The era of capitulating to coercion by the communist Chinese is over. They’re growing an adversarial control of strategic land and critical infrastructure in this hemisphere cannot and will not stand. To accomplish this, our countries cannot face these shared threats alone. We have to face them together. America will confront, will deter, and if necessary defeat these threats alongside all of you, our close and valued partners. Our mission is simple: achieve peace through strength through an America first approach. We’re doing this by restoring the warrior ethos, rebuilding our military and reestablishing deterrence.
Obviously, that didn’t go over well with China. Its embassy in Panama accuses the U.S. of hypocrisy as it “repeats ad nauseam the ‘Chinese interference and influence.’” It noted the U.S. invaded Panama in 1989 and asked: “Who represents the real threat to the Channel? People will make their own judgment.”
(In making that judgment, a reminder that the U.S. still controlled the Panama Canal in 1989, and Panama was run by dictator Manuel Noriega who had been indicted in the U.S. on drug crimes. He was also a former CIA informant, and American officials knew about his crimes — which included helping Pablo Escobar — for years before doing anything about it).
China’s influence over the Canal has grown since 2017, when Panama severed ties with Taiwan and established diplomatic relations with China. A Chinese company controls the largest port on the Atlantic side of the Canal, and a Hong Kong company, CK Hutchinson, controls ports on both ends of the Canal. Last month, BlackRock, an American investment firm, reached a deal to buy CK Hutchinson’s ports, but that deal could be in jeopardy of falling through. Chinese firms are also building a bridge across the Canal.
President Trump has said the U.S. should have never given up the canal to Panama, which occurred on Dec. 31, 1999, as agreed to in treaties that President Carter signed in 1977 and won Senate approval the following year.
While critics place a lot of blame on Carter, Presidents Nixon and Ford started the negotiations. There was bipartisan support to reach a deal (there was even a tentative deal in place in 1967, but a coup in Panama ended those negotiations) because there were tensions and sometimes violence between locals and Americans. The audio below is from a 1976 NBC story that describes life inside the barbed wire fence that surrounded the Canal Zone: “Its 40,000 American residents, both military and civilian, enjoy a suburban lifestyle.” Panamanians on the other side of the fence were resentful.
Ronald Reagan changed the political debate over the Canal during his primary challenge to Ford in 1976. Opposition to any deal with Panama became the focus of his campaign. Reagan says in the ad below: “We bought it, we paid for it, and General Torrijos (Panama’s dictator) should be told we’re going to keep it.”
The message was effective. Reagan won 24 states, and Ford didn’t secure the GOP nomination until the Republican National Convention.
Today’s debate over the Panama Canal
The Panama Canal was not a campaign issue in 2024. Trump first complained about passage rates charged to the Navy and U.S. shipping companies in two December 21 social media posts. Trump wrote that if the situation does not improve, “we will demand that the Panama Canal be returned to us, in full, and without question. To the Officials of Panama, please be guided accordingly!”
He repeated those criticisms and threats in a speech the following day:
It was not given for the benefit of others by a token of cooperation, but it was given to Panama and to the people of Panama, but it has provisions. You gotta treat us fairly, and they haven’t treated us fairly. If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, then we demand that the Panama Canal be returned to the United States of America in full, quickly and without question.
Congresswoman Debbie Wasserman Schultz called that “preposterous.” House Minority Leader Hakeem Jeffries also dismissed the idea of regaining control of the Panama Canal.
But Democratic Congressman Jared Moskowitz said Trump has a point. He dismissed the idea of taking the Canal by force, but said “the United States reasserting its history in the Panama Canal is actually a good, important, strategic issue.”
At a hearing in January, Senate Commerce Committee Chairman Ted Cruz voiced concern about the bridge that Chinese firms are building across the Canal.
The partially-completed bridge gives China the ability to block the Canal without warning, and the ports give China ready observation posts to time that action. This situation poses acute risks to U.S. national security.
A witness at that hearing, George Mason international law professor Eugene Kontorovich, testified that the presence of a Chinese company essentially means the Chinese military has a presence in the Canal.
In a communist regime, distinctions between private and government-owned firms are not as absolute or clear-cut as in a Western liberal society. This is particularly the case for the People’s Republic of China (PRC), which has an official doctrine known as “Military-Civilian Fusion,” a top-level strategy of the CCP Central Committee since 2019.
Here’s a timeline of key events in the history of the Panama Canal leading up to this week’s speeches from Hegseth.
January 22, 1903
The U.S. and Colombia, which controlled what is now Panama, agree to a treaty that gives the U.S. rights to the land to build the Canal in return for $10 million and $250,000 annually. However, Colombia’s congress rejects the deal.
November 3, 1903
With the backing of the U.S., Panama declares its independence from Colombia.
November 18, 1903
The U.S. and Panama sign the Hay-Bunau-Varilla Treaty, which establishes the Panama Canal Zone and “grants to the United States all the rights, power and authority within the zone.” The treaty has the same financial terms that Colombia’s Congress rejected. It’s ratified by the Senate and approved by President Theodore Roosevelt in February 1904.
August 15, 1914
The Panama Canal opens to shipping.
January 9, 1964
Panamanian rioters invade the Canal Zone and attempt to substitute the U.S. flag with a Panamanian one. The riots last three days, killing 22 Panamanians and four U.S. troops.
September 7, 1977
President Jimmy Carter and Panamanian dictator Omar Torrijos sign the Torrijos-Carter Treaties. Panama will take control of the Canal on Dec. 31, 1999. President Carter says:
This agreement thus forms a new partnership to ensure that this vital waterway, so important to all of us, will continue to be well-operated, safe, and open to shipping by all nations now and in the future. Under these accords, Panama will play an increasingly important role in the operation and defense of the Canal during the next 23 years, and after that, the United States will still be able to counter any threat to the Canal’s neutrality and openness for use.
Panama gains control of the Canal. Army Secretary Louis Caldera, the head of the U.S. delegation at the handover ceremony, says:
The United States could not aspire to be a good neighbor to Latin America and continue occupying and dividing the territory of a country considered a friend.
December 21, 2024
On Truth Social, President-elect Trump slams Panama for charging the United States “exorbitant prices and rates of passage” to use the Canal. He claims that China is influencing the canal’s management, before adding, “This complete ‘rip-off’ of our Country will immediately stop.”
While delivering a speech in Phoenix, Trump asks, “Has anyone ever heard of the Panama Canal? Because we’re being ripped off at the Panama Canal like we’re being ripped off everywhere else.”
When an audience member suggests taking back the Canal, Trump responds, “That’s a good idea.”
Panamanian President Jose Raul Mulino responds to Trump in a video he posts on X:
Mulino also issues a written statement, citing the Torrijos-Carter Treaties: “Every square meter of the Panama Canal and its adjacent area belong to PANAMA, and will continue to be. The sovereignty and independence of our country are not negotiable.”
He adds that passage rates are determined by “market conditions, international competition, operating costs and the maintenance and modernization needs of the interoceanic waterway,” and insists upon the Canal’s “permanent neutrality” and “open and safe operation for all nations.” He also rejects the notion that China wields any special influence over the Canal: “The Canal has no direct or indirect control from China, nor the European Union, nor the United States or any other power.”
Minutes later, he announces that Miami-Dade County Commissioner Kevin Marino Cabrera will serve as the next U.S. ambassador to Panama, “a Country that is ripping us off on the Panama Canal, far beyond their wildest dreams.”
December 26, 2024
Panamian President Murino holds a press conference to send a message to Trump that the Canal is not for sale.
The Canal is Panamanian and belongs to Panamanians. There’s no possibility of opening any kind of conversation around this reality, which has cost the country blood, sweat and tears.
He also denies Trump’s claim that the Chinese military has any presence in the Canal, saying, “There are no Chinese soldiers in the Canal, for the love of God.”
January 7, 2025
During a press conference at Mar-a-Lago, Trump refuses to rule out using military force to acquire the Panama Canal. He claims that it was “built for our military” and “is vital to our country.” He once again argues that the Canal is “being operated by China.”
January 9, 2025
Republican Congressman Dusty Johnson of South Dakota introduces the Panama Canal Repurchase Act of 2025, which authorizes the President and the Secretary of State to “initiate and conduct negotiations with appropriate counterparts of the Government of the Republic of Panama to reacquire the Panama Canal.”
Panama Canal Administrator Ricaurte Vásquez tells the Associated Press that the Canal cannot charge lower rates to U.S. ships. He speaks of his desire to “maintain the established rules,” insists that the Canal is a neutral economic zone, and says that the Chinese companies operating in its ports have no special influence over how the Canal is run.
January 20, 2025
During his inauguration address, President Trump describes how “American ships [that use the Panama Canal] are being severely overcharged and not treated fairly in any way, shape, or form.” He repeats his assertion that China controls the Canal and closes with the following: “We gave it to Panama, and we’re taking it back.”
Trump’s comments prompt another statement from Mulino in which he says, “The Canal was not a concession from anyone.”
Panama also sends the statement to the U.N. Security Council.
February 2, 2025
Secretary of State Marco Rubio arrives in Panama City to meet with Mulino.
Mulino attempts to assuage Rubio’s concerns about Chinese influence by announcing that Panama would allow its membership in China’s Belt and Road Initiative to expire. He also vows to allow more U.S. investments in Panama.
Later that day, Trump reiterates his interest in obtaining the Canal. He tells reporters that “something very powerful is going to happen” if Panama does not cede control over the waterway.
Secretary of State Rubio is in Panama right now, and we’re talking about the Panama Canal. What they’ve done is terrible. They violated the agreement. They’re not allowed to violate the agreement.
China is running the Panama Canal. That was not given to China; that was given to Panama, foolishly. But they violated the agreement, and we’re going to take it back, or something very powerful is going to happen.
March 4, 2025
A consortium led by BlackRock announces that it will purchase CK Hutchison’s holdings in the Panama Ports Company, which owns and operates two ports on each side of the canal. CK Hutchison is owned by Hong Kong billionaire Li Ka-shing, and it reportedly felt “political pressure to exit the ports business.” The deal is worth over $19 billion. Trump references the deal during his address to the joint session of Congress that evening (1:19:50 of the video below).
[The Panama Canal] was given away by the Carter administration for one dollar, but that agreement has been violated very severely. We didn’t give it to China. We gave it to Panama, and we’re taking it back.
March 5, 2025
In an X post, Mulino denies Trump’s implication that the BlackRock deal lays the groundwork for a U.S. takeover of the Canal. He accuses Trump of lying.
March 13, 2025
NBC News reports that the Trump administration plans to bolster the U.S. military presence in Panama. Military officials tell NBC that, while the goal is to eventually reclaim control over the Canal, a U.S. invasion remains unlikely.
March 20, 2025
The Chinese government threatens to block CK Hutchison from selling its controlling interest in the two Panama Canal ports to BlackRock.
April 7, 2025
A Panamanian government investigation finds that CK Hutchison owes the country’s government over $300 million in fees because it did not properly renew its contract to operate its two ports along the Canal. This development has the potential to delay or even jeopardize the company’s deal with BlackRock.
Later that night, Secretary of Defense Pete Hegseth arrives in Panama. He will speak at the reopening of an American port and address the Central American Security Conference. He is the first secretary of defense to visit Panama in two decades.
April 8, 2025
Hegseth meets with Mulino and Panama Canal Authority Administrator Ricaurte Vazquez.
They release a joint statement that says they agree to “strengthen bilateral Canal security cooperation,” guarantee “the expedited transit of warships and auxiliary vessels of the Republic of Panama and the United States, improve bilateral cyber cooperation,” and allocate Army Corps of Engineers resources towards ensuring the Canal’s sustainability. They also announce that they will move toward adopting a new mechanism for U.S. payment of Canal tolls and charges. The Defense Secretary praises Mulino for withdrawing Panama from the Belt and Road Initiative.
Panama’s version of their joint statement includes an additional detail: It says that Hegseth “recognized Panama’s leadership and inalienable sovereignty over the Panama Canal and its adjacent areas.”
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“So we’re going to have an order on that pretty soon – we can’t do that to our farmers and leisure too, hotels, we’re going to have to use a lot of common sense on that.”
President Donald Trump said Thursday that changes are coming to his aggressive immigration policies after complaints from farmers and business owners.
“Our great Farmers and people in the Hotel and Leisure business have been stating that our very aggressive policy on immigration is taking very good, long time workers away from them, with those jobs being almost impossible to replace,” Trump wrote in a social media post Thursday morning. “In many cases the Criminals allowed into our Country by the VERY Stupid Biden Open Borders Policy are applying for those jobs. This is not good. We must protect our Farmers, but get the CRIMINALS OUT OF THE USA. Changes are coming!”
Later Thursday, Trump made it clear that businesses need workers.
“Our farmers are being hurt badly. They have very good workers – they’re not citizens, but they’ve turned out to be great. And we’re going to have to do something about that,” the president said.
He added: “We can’t take farmers and take all their people and send them back because they don’t have, maybe, what they’re supposed to have.”
Just how Trump may change his approach to immigration enforcement remains unclear, but he said he wants to help farmers and business owners.
“You go into a farm and you look and people, they’ve been there for 20 or 25 years and they work great and the owner of the farm loves them and you’re supposed to throw them out. You know what happens? They end up hiring the criminals that have come in, the murderers from prisons and everything else,” Trump said.
Trump said changes would be coming soon, but gave little detail on how policies could change.
“So we’re going to have an order on that pretty soon – we can’t do that to our farmers and leisure too, hotels, we’re going to have to use a lot of common sense on that.”
In a later post on Truth Social, Trump said illegal immigration had destroyed American institutions.
“Biden let 21 Million Unvetted, Illegal Aliens flood into the Country from some of the most dangerous and dysfunctional Nations on Earth — Many of them Rapists, Murderers, and Terrorists. This tsunami of Illegals has destroyed Americans’ Public Schools, Hospitals, Parks, Community Resources, and Living Conditions,” the president wrote. “They have stolen American Jobs, consumed BILLIONS OF DOLLARS in Free Welfare, and turned once idyllic Communities, like Springfield, Ohio, into Third World Nightmares.”
He added that deportations would continue: “I campaigned on, and received a Historic Mandate for, the largest Mass Deportation Program in American History. Polling shows overwhelming Public Support for getting the Illegals out, and that is exactly what we will do. As Commander-in-Chief, I will always protect and defend the Heroes of ICE and Border Patrol, whose work has already resulted in the Most Secure Border in American History. Anyone who assaults or attacks an ICE or Border Agent will do hard time in jail. Those who are here illegally should either self deport using the CBP Home App or, ICE will find you and remove you. Saving America is not negotiable!”
For years, Canada’s political class sold us on the idea that carbon taxes were clever policy. Not just a tool to cut emissions, but a fair one – tax the polluters, then cycle the money back to regular folks, especially those with thinner wallets.
It wasn’t a perfect system. The focus-group-tested line embraced for years by the Trudeau Liberals made no sense at all: we’re taxing you so we can put more money back in your pocketbooks. What the hell? If you care so much about my taxes being low, just cut them already. Somehow, it took years and years of this line being repeated for its internal contradiction to become evident to all.
Yet, even many strategic conservative minds could see the thinking had internal logic. You could sell it at a town hall. As an editorial team member at an influential news organization when B.C. got its carbon tax in 2008, I bought into the concept too.
And now? That whole model has been thrown overboard, by the very parties had long defended it with a straight face and an arch tone. In both Ottawa and Victoria in 2025, progressive governments facing political survival abandoned the idea of climate policy as a matter of fairness, opting instead for tactical concessions meant to blunt the momentum of their foes.
The result: lower-income Canadians who had grown accustomed to carbon tax rebates as a dependable backstop are waking up to find the support gone. And higher earners? They just got a tidy little gift from the state.
The betrayal is worse in B.C.
This new chart from economist Ken Peacock tells the story. He shared it last week at the B.C. Chamber of Commerce annual gathering in Nanaimo.
Ken-Peacock- B.C. Chamber of Commerce annual gathering in Nanaimo.
What is shows is that scrapping the carbon tax means the poor are poorer. The treasury is emptier.
What about the rich?
Yup, you guessed it: richer.
Scrubbing the B.C. consumer carbon tax leaves the lowest earning 20 percent of households $830 per year poorer, while the top one-fifth gain $959.
“Climate leader” British Columbia’s approach was supposed to be the gold standard: a revenue-neutral carbon tax, accepted by industry, supported by voters, and engineered to send the right price signal without growing the size of government.
That pact broke somewhere along the way.
Instead of returning the money, the provincial government slowly transformed the tax into a $2 billion annual cash cow. And when Mark Carney won the federal election, B.C. Premier David Eby, boxed in by his own pledge, scrapped the tax like a man dropping ballast from a sinking balloon. Gone. No replacement. No protections for those who need them most.
Filling the gas tank, on the other hand, is noticeably cheaper. Of course, if you can’t afford a car that might not be apparent.
Spare a thought for the climate activists who spent 15 years flogging this policy, only to watch it get tossed aside like a stack of briefing notes on a Friday afternoon.
Who could not conclude that the environmental left has been played. For a political movement that prides itself on idealism, it’s a brutal lesson in realpolitik: when power’s on the line, principles are negotiable.
But here’s the thing: maybe the carbon tax model deserved a rethink. Maybe it’s time for a grown-up look at what actually works
With B.C. now reviewing its CleanBC policies, here’s a basic question: what’s working, and what’s not?
A lot of emission reductions in this province didn’t come from government fiat. They were the result of business-led innovation: more efficient technology, cleaner fuels, and capital discipline.
That, plus a hefty dose of offshoring. We’ve pushed our industrial emissions onto other jurisdictions, then shipped the finished goods back without attaching any climate cost. This contradiction particularly helped to fuel the push to dump carbon pricing as a failed solution.
The progressives’ choice was made once the anti-tax arguments could no longer be refuted: to limit losses it would be necessary to deep six an unpopular strand of the overall carbon strategy. This, to save the rest. That’s why policies like the federal emissions cap haven’t also been abandoned.
To give another example, it’s also why British Columbia’s aviation sector is in a flap over the issue of sustainable aviation fuel. Despite years of aspirational policy, low emissions jet fuel blends remain more scarce than a long-haul cabin upgrade. The policy’s designers correctly anticipated that refiners would never be able to meet the imposed demand, and so as an alternative they provided a complex carbon credit trading scheme that will make the cost of flying more expensive. For those with a choice, nearby airport hubs in the United States where these policies do not apply will become an attractive alternative, while remote communities that have no choice in the matter will simply have to eat the cost. (Needless to say, if emissions reduction is your goal this policy isn’t needed anyways, since the decisions that matter in reducing global aviation emissions aren’t made in B.C. and never will be.)
I’m not showing up to bash those who have been genuinely trying to figure things out, and found themselves in a world of policy that is more complicated and unpredictable than they realized. Simply put, the chapter is closing on an era of energy policy naïveté.
The brutally honest action by Eby and Carney to eject carbon taxes for their own political survival could be read as a signal that it’s now okay to have an honest public conversation. Let’s insist on that. For years now, debate has been constrained in part by a particular form of linguistic tyranny, awash in terminology designed to cow the questioner into silence. “So you have an issue with clean policies, do you? What kind of dirty reprobate are you?” “Only a monster doesn’t want their aviation fuel to be sustainable.” Etc. Now is the moment to move on from that, and widen the field of discourse.
Ditching bad policy is also a signal that just maybe a better approach is to start by embracing a robust sense of the possibilities for energy to improve lives and empower all of the solutions needed for tomorrow’s problems. Because that’s the only way the conversation will ever get real.
Slogans, wildly aspirational goal setting and the habit of refusing to acknowledge how the world really works have been getting us nowhere. Petroleum products will continue to obey Yergin’s Law: oil always gets to market. China and India will grow their economies using reliable energy they can afford, having recently approved the construction of the most new coal power plants in a decade amid energy security concerns. Japan, which has practically worn itself out pleading for natural gas from Canada, isn’t waiting for the help of last-finishing nice guys to guarantee energy security: today, they are buying 8% of their LNG imports from the evil Putin regime.
Meanwhile, we’re in the worst of both worlds: our courageous carbon tax policy that was positioned as trailblazing not just for B.C. residents but for the world as a whole – climate leadership! – is gone, the poorest are puzzling over why things feel even more expensive, and nobody knows what comes next.
Listen now · 6:22
Ken-Peacock- B.C. Chamber of Commerce annual gathering in Nanaimo.
