The Panama Canal’s Quiet Role in Trump’s Global Trade Showdown

The Panama Canal, a key artery in global trade and a critical passage for U.S.-bound freight, is facing new turbulence not just from extreme weather, but from President Donald Trump’s escalating trade war with China.

With 75% of its traffic tied to U.S. commerce, the Panama Canal is now feeling the effects of sharply reduced Chinese manufacturing orders and a surge in canceled vessel sailings. “Any recession worldwide or in the United States will impact the Panama Canal somehow,” said Boris Moreno, VP of Operations for the Panama Canal Authority. “That’s for sure.”

Trump’s recently announced 145% tariff on Chinese goods, set to impact cargo arriving in U.S. ports by late May, has already triggered a dramatic pullback in imports. According to supply chain intelligence firm Project44, blank sailings, canceled freight vessel routes, from China to the U.S. have spiked by 300% since Trump’s April 2 announcement. Sea-Intelligence reports that over 260,000 TEUs (twenty-foot equivalent units) of capacity have been pulled from the Asia–U.S. East Coast route in just six weeks.

For the Panama Canal, which earns revenue based on vessel transits and container volumes, fewer shipments mean fewer dollars. The canal handles 40% of U.S. container traffic and processes $270 billion in cargo annually. Despite recent drought challenges, the canal saw revenue hit $3.38 billion last year, a figure now at risk.

Beyond economics, the canal has reemerged as a geopolitical flashpoint. Trump has accused Panama of ceding control of key canal ports to China and hinted at reasserting U.S. influence over the waterway. Both Panama and China deny the claims. The visits of Secretary of State Marco Rubio and Secretary of Defense Pete Hegseth to Panama underscore rising tensions.

As Trump’s trade war continues to disrupt global logistics, the Panama Canal’s fate may become a barometer of broader economic and strategic shifts, where freight, finance, and foreign policy collide.