Panama has denied claims made by the US State Department that American government vessels can now transit the Panama Canal without paying fees. The Panama Canal Authority (ACP) stated that it retains full authority to set tolls and other fees for the canal’s use and has not made any adjustments to them. The statement directly contradicts the US claim that waiving transit fees would save the American government millions of dollars annually.

The canal, a vital 51-mile (82-km) trade route connecting the Atlantic and Pacific oceans, was built by the US but was gradually handed over to Panama following a 1977 treaty signed by President Jimmy Carter. The treaty allows the US to intervene militarily if the canal’s operations are disrupted by internal conflict or a foreign power. Since 2000, the canal has been operated by the ACP, whose leadership is appointed by the Panamanian government but functions independently.

The dispute comes amid growing tensions between the US and Panama over China’s influence in the region. During a visit to Latin America, US Secretary of State Marco Rubio met with Panama’s President José Raúl Mulino and the canal’s administrator, Ricaurte Vásquez Morales. While Mulino affirmed that Panama’s sovereignty over the canal is non-negotiable, he acknowledged Washington’s concerns over Beijing’s role in the region. He also announced that Panama would not renew its 2017 memorandum of understanding with China’s Belt and Road Initiative and suggested the agreement could end earlier than expected.

China’s involvement in the canal has been a point of contention for the US. Panama Ports, a subsidiary of the Hong Kong-based CK Hutchison Holdings, operates terminals on both ends of the canal, alongside other international firms. The company, one of the world's largest port operators, oversees 53 ports across 24 countries, including in US allies such as the UK, Canada, and Australia. While it does not control access to the canal, its presence has fueled US concerns about Chinese influence.

The latest controversy follows remarks by US President Donald Trump, who reiterated his desire to "take back" the canal, arguing that Panama had violated its neutrality agreement and that China was exerting undue control. Trump warned of "powerful" US action if necessary. His stance has been firmly rejected by Mulino, who insisted that Panama remains fully in charge of its own infrastructure and administration. He emphasized that no foreign power, including China, interferes in the canal’s operations.

Panama has stated that while it is open to discussions with the US regarding the prioritization of naval vessels, no agreement has been made to exempt American government ships from tolls. The canal remains crucial to global trade, with US-linked vessels accounting for 52% of transits in 2024. Each year, up to 14,000 ships pass through, avoiding a much longer and costlier route around the southern tip of South America.

Over the past 26 years, the US has paid a total of $25.4 million in transit fees for its warships and submarines, averaging less than $1 million per year. While this amount is relatively low compared to the canal’s total revenue, the US government sees any financial relief from fees as beneficial. However, Panama has maintained its stance that any changes to canal tolls will be determined solely by the ACP and not through external pressure.

Sources:

• CNN
• Fox News
• CBS News