The U.S. State Department announced Wednesday that American government vessels can now transit the Panama Canal without paying fees.
“The government of Panama has agreed to no longer charge fees for U.S. government vessels to transit the Panama Canal,” the department stated in a post on X, noting the agreement will save the U.S. government millions of dollars annually.
The Panama Canal Authority has not yet responded to requests for comment. The agreement follows a Sunday meeting between Secretary of State Marco Rubio and Panamanian President Jose Raul Mulino in Central America.
Strategic Importance of the Panama Canal
The Panama Canal remains a critical waterway for global trade, facilitating the movement of goods between the Atlantic and Pacific Oceans. Each year, thousands of vessels use the passage, including those carrying essential commodities like oil, grain, and consumer goods.
For the U.S. military and government operations, access to the canal is strategically vital. The exemption from fees ensures that U.S. government vessels, including naval ships and Coast Guard cutters, can navigate the canal without financial constraints. Officials say this move strengthens U.S.-Panama ties and enhances America’s regional power and response.
Trump’s Stance on the Canal
Panama has become a key focus for the Trump administration as President Donald Trump has repeatedly criticized the country for imposing what he calls excessive transit fees. Trump argues Panama unfairly profits from a waterway the U.S. built and once controlled.
Last month, Trump warned that if Panama fails to uphold its commitments, the U.S. could demand the canal’s return.
“If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, then we will demand that the Panama Canal be returned to us, in full, and without question,” Trump stated.
Trump’s comments have drawn mixed reactions. Some conservatives and security analysts say America’s role in building and maintaining the canal justifies greater U.S. influence. However, Panama’s leadership has firmly rejected any notion of relinquishing control.
Historical Context and Panama’s Response
President Mulino has dismissed Trump’s remarks about reclaiming the canal, emphasizing Panama’s sovereignty over the passage. The U.S. controlled the territory surrounding the canal for decades before signing two treaties in 1977 that led to its return to Panama. After a period of joint administration, full control of the canal was transferred to Panama in 1999.
Since taking full control, Panama has modernized and expanded the canal to accommodate larger vessels and increased traffic. The revenue generated from canal tolls remains a major source of income for the Panamanian government.
While the new agreement eliminates fees for U.S. government vessels, commercial ships, including those from the U.S., will still be required to pay transit costs. Some industry analysts believe this could set a precedent for further negotiations over canal fees in the future.
With global shipping facing challenges from supply chain disruptions and security concerns in the Red Sea, the Panama Canal remains a crucial alternative for maritime trade. The latest U.S.-Panama agreement could strengthen diplomatic ties while ensuring continued access to this strategic waterway.
