Panama pays us for the canal
At least, if you use Trump's logic
Recently Trump’s been complaining about Jimmy Carter handing over the Panama Canal to Panama, allowing them to increase the passage fee. However, he’s also complained that we’re “subsidizing” Mexico and Canada because we have a trade deficit with them.
Well, Trump should be pleased to hear that the Panama Canal earns roughly $5 billion in revenue a year, whilst Panama “subsidizes” the US about $7-$10 billion a year!
Each fiscal year the Panama Canal releases a report detailing several figures, including its revenue. This year it reported a total revenue of 4.99 billion PAB, which is slightly over 5 billion USD. Now not all of this cost comes from ships heading to or from the US, or ships owned by the US. I don’t even think that data is available, so let’s just be extra generous and assume all of it is paid by the US.
The Panama Canal’s fiscal year 2024 runs from October 1, 2023, to September 30, 2024. Using data from the Census Bureau, we can calculate that the US ran a roughly $10.5 billion trade surplus with Panama in that period. Our trade surplus is Panama’s trade deficit, so with Trump’s logic they are subsidizing us about $10.5 billion a year and we pay Panama at most $5 billion a year. These numbers have been roughly the same for a few years with 2020 being a slight outlier. With Trump’s logic, we are clearly the winners from trade with Panama.
Of course, I’ve explained Trump’s logic as absurd in previous posts. But if you still adhere to it then maybe you think we could expand our gain by once again controlling the Panama Canal. Maybe that would benefit the US in the short term, but overall, I still think it would be a bad move. The US is by no means perfect but I think we’re generally a force for good in the world—at least relative to Russia, China, and Iran. I don’t much like Trump is threatening Panama for purely economic gain, at least Russia provides a pretext of “denazification” when invading Ukraine. The US needs allies to challenge China and tariffing or threatening allies is not a good way to reduce dependence on China.