Major port terminal deal follows Trump's Panama Canal squeeze

Trump’s pressure

In his inaugural speech as President, Donald Trump made pointed remarks about China in relation to the Panama Canal, stating, "China is operating the Panama Canal, and we didn’t give it to China; we gave it to Panama, and we’re taking it back".

There was considerable speculation that his comments were directed at Hutchison Ports, and Reuters reported on 21 January that Panama authorities had launched an audit of the Hong Kong-based port operator the day following President Trump’s inauguration.

Reflecting on the deal between BlackRock - MSC and CK Hutchison, President Trump reiterated his stance during his first address to Congress since returning to the White House,

"To further enhance our national security, my administration will be reclaiming the Panama Canal, and we’ve already started doing it," he said. 

Intermodal head of research Yiannis Parganas told Riviera this development could serve as a powerful negotiating tool for President Trump should he attempt to take control of the Panama Canal. “We can’t rule out any possible scenario moving forward,” he added.

According to Mr Parganas, President Trump’s focus on the Panama Canal is part of his broader strategy to target Chinese-related investments. The deal could also be seen as a defensive measure by companies looking to avoid complications arising from such political tactics.

Geopolitical implications

BRS Shipbrokers recently analysed the situation, suggesting future negotiations between the US and Panama could unfold. “Given Donald Trump’s penchant for unconventional dealmaking, there is potential for future negotiations to establish a toll agreement that favours US trade – including dry bulk shipments – different from the existing fee structure, thereby easing tensions,” analysts noted.

However, taking control of the Panama Canal is a complex matter. Alibra Shipping pointed out on social media that the canal was handed over to Panama on 31 December 1999, under a 1977 treaty. According to Alibra, as part of this treaty, the US government relinquished control of the canal. The treaty permits ships from any country to use the canal and it does not include any clause that allows the US to take back ownership, analysts noted.

Focusing on China, maritime expert and Vespucci Maritime chief executive Lars Jensen commented on social media that the sale of Hutchison’s foreign terminals might be viewed as a reduction in the spread of China’s Belt and Road Initiative. “This is not something the Chinese would want at the face of it, hence there might be something else – political – afoot here at the same time,” he added.

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