Filenews 1 February 2025 - by Kyle Khan-Mullins
Donald Trump has his own real estate empire – but now he wants to expand the American one. Before his inauguration, he repeatedly called for the United States to gain control of Greenland – a self-governing territory but owned by Denmark – with Copenhagen responding by announcing more than 2 billion dollars in funds to strengthen its military presence in the Arctic.
In his speech at his inauguration ceremony on Jan. 20, Trump did not mention Greenland as his next conquest. This "role" was taken by the Panama Canal. "We gave it to Panama," he said, "and we are taking it back." Panama's president, Jose Raul Mulino, has rejected any prospect of changing ownership of the canal, but Trump does not seem willing to give up that demand easily, and perhaps new U.S. Secretary of State Marco Rubio's first trip abroad will be to Panama. The scenario of Panama selling the canal, either voluntarily or under American coercion, has little chance of materializing.
But why does Trump care so much about the Canal, and what is the real value of this waterway?
Forbes spoke with experts and found that the answer to the question is at least 11 figures. The Canal is an excellent business. In 2024, its net profit amounted to €3.5 billion. dollars, while its total revenue was about 5 billion dollars. The assets associated with the "core" of the Canal's activities (see bridges, airports, tolls) can multiply 20 to 35 times the EBITDA of the Canal, boosting its "theoretical" valuation to 70-120 billion dollars.
An asset as fundamental to global trade as the Panama Canal needs an extra premium. Nearly 10,000 merchant ships passed through the Canal in 2024, carrying cargoes of about 423 million tonnes. Each ship paid hundreds of thousands of dollars in Canal transit fees depending on the size and capacity of its cargo.
Shipping companies prefer to pay transit fees as the alternatives are much worse. "By definition, the Panama Canal is a monopoly asset," said Stephen Dowd, chief investment officer at CBRE. "Who are the competitors? The dangerous and time-consuming cycle of South America, or to transport the merchandise by plane somewhere on the West Coast of the U.S. and thence to be transported by train to their destination."
In addition, geopolitical issues must be taken into account. In terms of infrastructure, the Panama Canal has only one equivalent worldwide: the Suez Canal in Egypt, which connects the Mediterranean with the Red Sea. Several military conflicts have broken out over control of Suez in the past. The Panama Canal is equally essential for world trade. "As an asset it has strategic value, related to U.S. economic and national security," notes Matt Neuringer, of Orrick, Herrington & Sutcliffe. "Its valuation goes to another level because the Canal has great intangible value to the U.S. government."
Using a theoretical valuation method, Neuringer proposes that the Canal's contribution to Panama's annual GDP of €83 billion would be a major factor in the development of the Canal. The U.S. dollar — estimated by the Canal Authority in 2023 at between 3-6 percent, or about $2.5 billion to $5 billion — will multiply over the duration of a deal. A 50-year lease could boost the valuation of the canal to at least €125 billion to €250 billion dollars. This could be reduced if the US committed to a revenue-sharing agreement with Panama or undertook to cover certain future costs. "I think anything less than such an agreement would be difficult for the Panamanian government to sell to its people." Neither the Canal Authority nor the Panamanian embassy in Washington responded to a request for comment.
Control of the Canal is an issue rooted deep in time. As early as the 1690s, the then independent Kingdom of Scotland tried to colonize the area to facilitate its commercial purposes. In the late 1800s, a French company was the first to attempt to build a canal. The tens of thousands of deaths from disease in the region forced Paris to abandon the project. The US, after supporting Panama's struggle for independence from Colombia, undertook the construction of the Canal in 1904, dug over 240 million cubic meters of soil and the Canal was opened in 1914. Its construction was not cheap, at the time it cost 375 million dollars, which in today's money equals about 12 billion dollars.
In the following decades, Panama expressed its dissatisfaction with U.S. control over the canal. In 1979, President Jimmy Carter agreed to return control of a 10-mile-wide zone of the canal to Panama, and in 1999 the entire canal, provided Washington could defend the canal's neutrality by sending troops.
Improvement projects, costing the Panamanian government more than €5 billion. Completed in 2016, the Canal was able to serve even larger ships, a fact that further increased revenues: approximately 56% in the five-year period 2019 and 2024. Trump believes this money belongs to the US. Last December, he complained that "the transit fees charged by Panama are ridiculous." Although fees have increased significantly in the last year. It should be noted that more than 70% of ships passing through the Canal go to or come from American ports.
Trump and some of his allies in Congress have expressed concern about Chinese control of the canal (a claim Panama denies), noting that China-based companies manage ports and other major infrastructure projects in Panama that could, in theory, pose a threat to U.S. access to the canal in the event of a collision. "I am grateful to President Trump for his awareness of the situation in the Panama Canal and the threats to American interests," Texas Senator Ted Cruz said before the Senate on Jan. 28. "We cannot afford to let American companies chartering ships be blackmailed. We cannot turn a blind eye if Panama exploits an asset of vital commercial and military importance. And we cannot stand idly by while China advances."
If Panama refuses to sell the canal, Trump could try to claim it militarily — such a move could meet with opposition from Congress and the global community.
Performance – editing: Michalis Papantonopoulos
