Among the many bombastic claims made by President Donald Trump during his inaugural speech on Monday, few stood out as much as his vow to retake the Panama Canal.
At Kalshi, traders are currently pricing the chances of the United States taking control of at least part of the canal before Jan. 20, 2029, when Trump's second term is scheduled to end. Let’s break down the case for each side and see where the smart money is on this Trump market.
Will Donald Trump take back the Panama Canal?
Yes: 42¢ ($5.62 payout on $10 purchase)
No: 59¢ ($3.93 payout on $10 purchase)
(Exchange prices courtesy Kalshi as of Jan. 22 at 2 p.m. ET)
The case for "Yes"
Nobody thinks a U.S. takeover of the Panama Canal will be easy, and there are multiple difficulties that will have to be overcome, as I’ll break down below. But there are some signs that Trump is taking this idea more seriously than some of the others he has brought up in recent months.
During the inauguration, there was no talk of buying or taking over Greenland, nor were threats made towards Canada. However, Trump spent plenty of time outlining his case for why the United States should take back the Canal, which was returned to Panama via the Panama Canal treaties in 1978, and finally handed over to the nation in 1999.
“Panama’s promise to us has been broken,” Trump said on Monday. “The purpose of our deal and the spirit of our treaty has been totally violated. American ships are being severely overcharged and not treated fairly in any way, shape or form.”
Trump also accused China of operating the canal – the Panama Ports Company is a subsidiary of a Hong Kong-based corporation – and hasn’t ruled out the use of military force to take the Panama Canal.
Is it a wild idea? Sure, but Trump has already pressed forward with plans that many weren’t convinced he would go through with (if not at all, then at least so quickly), such as his blanket pardon of most individuals charged with crimes at the Capitol on Jan. 6, 2021. If Trump truly has his mind set on retaking the Panama Canal, he may pursue that goal far more vigorously than most people expect.
The case for "No"
Remember when I said there were some difficulties with the idea of the USA taking control of the Panama Canal? That may have been putting it lightly.
Panamanian President Jose Raul Mulino said Wednesday that the return of the Panama Canal to his country wasn’t a gift, but rather a return of land that should never have been taken from his country.
“We reject in its entirety everything that Mr. Trump has said,” Mulino said during the World Economic Forum in Switzerland. “The Panama Canal was not a concession or a gift from the United States.”
With Panama seemingly having absolutely no interest in turning over the canal at any price, it’s likely that military action would be necessary to actually regain control of it. And while the United States could certainly do so, it would be a major military land operation, something Trump has opposed in the past.
Such an action would also violate current treaties, potentially damage worldwide trade, and have significant political consequences internationally. And even if Trump wants to think only of his personal priorities, Panama is a key partner in limiting immigration from Central America – one of the primary goals in Trump’s platform.
My pick
I can’t entirely rule out Trump finding a way to take control of the Panama Canal, but it would take a huge amount of his political capital and could potentially require military action to accomplish. There’s a reasonable chance that this idea goes nowhere, as well as an high probability that these threats will be used to get some concessions from Panama in exchange for backing off. Take the value on No here while it’s still available.
My pick: No (59¢)
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