Oh, SHIP! Trump vs. Panama Canal

Panama hats required, so grab yours before reading on.

It better be on.

Rocking the boat: Okay, so… the Panama Canal is another item on Donald Trump’s list to upend or at least create some waves.

Locks and dam(n)s: The Panama Canal is vital for U.S. ag—especially soybeans. Soybean producers are the #1 ag customer of the Panama Canal, shipping at least 600M bushels of beans every year, according to the Soy Transportation Coalition. More than 70% of the freight through the canal is either going to or coming from the U.S.

Going overboard: Trump accused Panama of violating a treaty that preserves neutral access to the canal, and also claimed U.S. ships are being charged unfairly for using the canal. But Panama says no countries receive preferential treatment over any others. Trump also thinks there’s too much Chinese influence on the canal, saying it’s a security threat. Two of the ports in the region are operated by a company based in Hong Kong.

I’m going down with this ship: Adding to this: drought, including lingering effects from the low water levels of 2023. Fewer ships can travel on the canal in low water situations (and those that can have to be lighter). When this happens, the canal manages capacity by giving out pre-booked slots to vessels, then auctions off the rest to the highest bidder. Commodities with bigger pockets typically get the golden ticket—and that’s not usually ag commodities, sorry to say. Food for thought: the canal is losing 1-2% of its water each year.

Navigating rough waters: Panama has initiated an audit of the Hong Kong company’s port operating contracts. Even if there is evidence of any violations, it doesn’t mean the Panama Canal returns to U.S. ownership. (Ownership.)