Panama Eliminates Fees for U.S. Government Vessels Transiting the Panama Canal

In a significant development for U.S.-Panama relations, the U.S. State Department announced on Wednesday that Panama has agreed to eliminate fees for U.S. government vessels transiting the Panama Canal. This decision is expected to save the U.S. government millions of dollars annually.

The U.S. State Department made the announcement through a post on social media platform X, stating, "U.S. government vessels can now transit the Panama Canal without charge fees, saving the U.S. government millions of dollars a year."

This move comes after U.S. Secretary of State Marco Rubio's visit to Panama on February 1, marking his first official trip to the country since assuming the role of the U.S. top diplomat. Rubio's visit was seen as a sign of strengthening diplomatic ties between the two nations.

The change follows growing tensions between the U.S. and Panama over canal fees. After winning the presidential election in November, former President Donald Trump had publicly threatened to take control of the Panama Canal, accusing Panama of charging excessive tolls for U.S. vessels passing through one of the world's busiest waterways. The elimination of these fees could be seen as a response to those concerns, easing the financial burden on U.S. government vessels and promoting closer collaboration with Panama.

The Panama Canal, a critical global trade route that connects the Atlantic and Pacific Oceans, plays a key role in international shipping and military logistics. Panama has long controlled the canal, which was handed over by the United States in 1999 following the Panama Canal Treaty of 1977. The decision to waive tolls for U.S. government vessels signals a renewed commitment to fostering positive relations between the two countries and facilitating smoother operations in this vital waterway.

Trump Criticizes Panama Canal Fees; Rubio Expresses Concerns Over Chinese Influence

In a post on his Truth Social platform in November, former President  Donald Trump expressed frustration with Panama's toll fees for U.S. vessels transiting the Panama Canal, calling them "ridiculous" and claiming that both U.S. Navy and commercial interests had been treated unfairly.

"Our Navy and Commerce have been treated in a very unfair and injudicious way. The fees being charged by Panama are ridiculous," Trump wrote, highlighting ongoing tensions regarding Panama Canal tolls.

The U.S. was instrumental in the construction of the Panama Canal in 1914 and administered the surrounding territories for decades. However, following the Panama Canal Treaty of 1977, the U.S. handed full control of the canal to Panama in 1999, transitioning from joint administration. Despite this, the canal remains a critical waterway for U.S. military and commercial operations, and the recent fee dispute has sparked renewed concern.

Amid these tensions, U.S. Secretary of State Marco Rubio visited Panama on February 1, 2025, and met with Panamanian President Jose Raul Mulino and Foreign Minister Javier Martinez on February 2 in Panama City. During the meeting, Rubio raised Trump's concerns, which also centered around China's growing influence over the Panama Canal area. Rubio cautioned Panama about the increasing control exerted by the Chinese Communist Party over the strategic waterway, labeling the situation "unacceptable."

Rubio also warned that if immediate changes were not made, the U.S. would be forced to take "necessary measures" to safeguard its interests under the Panama Canal Treaty. A U.S. State Department spokesperson, Tammy Bruce, emphasized that Trump had already made a "preliminary determination" that China's influence in the region posed a significant threat to U.S. national security. The statement further suggested that the U.S. might need to take actions to protect its rights under the Permanent Neutrality and Operation of the Panama Canal, a provision ensuring that the canal remains neutral and open to all nations.

The U.S.'s heightened focus on the Panama Canal comes as geopolitical tensions between the U.S. and China continue to escalate, with both sides vying for influence over key global trade routes.

References