Why Trump’s Trade War Puts the Panama Canal in the Middle of a Global Shipping Storm

The Panama Canal is under pressure — and not just from droughts and low water levels. Former President Donald Trump’s aggressive trade stance toward China is now causing a slowdown in the global shipping lane that plays a crucial role in getting goods to the United States.

About 40% of U.S. container traffic moves through the Panama Canal, with cargo worth around $270 billion passing through each year. Even during challenging times, the canal has stayed profitable — last year alone, it brought in $3.38 billion in revenue.

But that could soon change. Trump recently announced tariffs of up to 145% on Chinese electric vehicles and other products, aiming to protect American industries. Since the announcement in early April, shipping companies have started pulling back. Analysts from Project44 say blank sailings from China to the U.S. have surged by 300%, showing just how fast trade is reacting to the new tariffs.

Less demand for Chinese goods means fewer ships making the trip — and that affects the Panama Canal directly. According to Sea-Intelligence, over 261,000 shipping containers (measured in twenty-foot units or TEUs) have been cut from Asia-to-U.S. East Coast routes in just six weeks.

That’s a big deal for the canal, which makes money based on how many ships and containers pass through.

“Close to 75% of our cargo goes to or from the United States,” said Boris Moreno, VP of operations at the Panama Canal Authority. “If there’s a slowdown in the U.S. economy or world trade, it hits us too.”

But it’s not just trade numbers causing tension. Trump has hinted that China’s influence in the region is growing too strong. He’s even suggested the U.S. should take a closer look at who controls the ports and shipping routes around the canal — including some run by Chinese-backed companies. Panama and China both deny any political interference.

Still, the U.S. is clearly paying attention. High-level visits from Secretary of State Marco Rubio and Defense Secretary Pete Hegseth have signaled concern about growing Chinese investment in Latin America.

“Panama has moved closer to China in the last five years,” said U.S. Maritime Commissioner Louis Sola. “We’ve seen $20 billion in contracts shift to Chinese and Brazilian hands. If the U.S. wants to stay relevant, it has to stay in the game.”

In response, the Panama Canal Authority insists on neutrality. Administrator Ricaurte Vásquez said the canal isn’t controlled by any foreign government and that its doors remain open to all global shipping traffic.

“We don’t take sides. We operate under a neutrality treaty,” Vásquez said. “But we pay attention to what’s happening — especially in the U.S.”

At the same time, big money is circling the canal. A group led by U.S. investment giant BlackRock is reportedly in talks to buy dozens of ports, including key terminals at both ends of the canal, currently managed by Hong Kong-based CK Hutchison.

Nothing is finalized yet, but if the deal goes through, it would mark a major shift in who holds influence over one of the world’s most important shipping routes — at a time when global trade is more unpredictable than ever.