Panama Canal Fact Sheet

Key Facts About the Panama Canal

• Who built the Panama Canal?

  The Hay-Bunau-Varilla Treaty of 1903 was an agreement between the United States and Panama giving the United States the right to build the Panama Canal in exchange for $10 million and a yearly payment of $250,000. The United States built the waterway between 1904 and 1914. (1,2)

• What did it cost in treasure and lives?

  At least 5,600 laborers lost their lives digging the Canal, from accidents and diseases such as yellow fever and malaria. The estimated cost of the project was $375 million, or roughly $12 billion adjusted for inflation. (3,4)

• Why did President Jimmy Carter negotiate the Panama Canal Treaties?

  Panamanian protests over US control of the Panama Canal and surrounding territory threatened the Canal’s operations and strained US relationships in Latin America. The Johnson, Nixon, and Ford administrations engaged in negotiations over Canal ownership and in 1977, President Jimmy Carter and General Omar Torrijos of Panama reached an agreement on two treaties that the Senate ratified by a single vote. (5,6)

• What do the Panama Canal Treaties say?

  The first, “The Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal,” assured perpetual US access to the Canal and the right to defend it. The second, “The Panama Canal Treaty,” abolished the Panama Canal Zone on October 1, 1979, and turned over the Canal to Panama on December 31, 1999. (7)

• What is Panama’s record operating the Panama Canal?

  Under Panamanian control, the Canal has remained a major artery of international commerce, managing 5% of global trade. In 2016, Panama completed a ten-year expansion project that doubled the Canal’s capacity. (8)

• Did the United States pay to expand the Panama Canal?

  No. The Panama Canal Authority paid for the $5.25 billion expansion project, including through loans from five multilateral banks. (9,10)

• Is China operating the Panama Canal?

  The Panama Canal is run by a state-owned enterprise, the Panama Canal Authority. China is the Canal’s number-two user, and a Chinese company has operated ports at either end of the Canal since 1997. In March 2025, the Hong Kong-based company announced plans to sell its port concessions to US-based BlackRock. (11)

• How high are Panama Canal tolls?

  Toll prices depend on the type and size of a vessel and its cargo. They increased in 2024 during a drought that limited Canal traffic. The tolls pay for Canal operations and maintenance and generate $5 billion in profits for Panama every year. (12, 13)

• How has Panama responded to US requests to return the Canal to US control?

  Panama’s President José Raúl Mulino has refused to negotiate over control of the Panama Canal. However, in response to US concerns, he announced an audit of the contracts for port management by the Hong Kong-based company CK Hutchison. (14, 15) 

• Do US Navy ships pay to cross the Panama Canal?

  US Navy ships are required to pay the standard tolls to transit the Panama Canal, in accordance with Article II of the Neutrality Treaty, which forbids “discrimination against any nation.” But they get special treatment; the treaty promises Navy vessels will cross “expeditiously.” (16, 17)

• Why did Panama Canal tolls increase in 2024?

  In 2022, amid declining revenue, the Panama Canal Authority began gradually raising tolls. The next year, after a severe drought led to limits on the number and size of ships using the Canal, an auction system offered ships the option to pay more to skip the line. (18, 19, 20) 

• Why is the United States concerned about Chinese-operated ports by the Panama Canal?

  Longstanding concerns related to two ports on either side of the Panama Canal operated by a Chinese company included fears of Chinese intelligence collection on global trade and US Navy activity, and Beijing’s potential leveraging of Hutchinson’s port concession to disrupt Canal operations in wartime. (21, 22)

• Sources

  Sources

  1.  "Panama Canal." Office of the Historian, U.S. Department of State, https://history.state.gov/milestones/1977-1980/panama-canal#:~:text=As%20the%2020th%20century%20progressed,relations%20between%20the%20two%20countries. Accessed 28 Jan. 2025. 
  2. "Panama Canal Treaty." The Avalon Project, Yale Law School, avalon.law.yale.edu/20th_century/pan001.asp. Accessed 28 Jan. 2025. 
  3. "End of the Construction." Panama Canal, Panama Canal Authority, pancanal.com/en/end-of-the-construction/. Accessed 28 Jan. 2025. 
  4. "Inflation Calculator." U.S. Bureau of Labor Statistics, U.S. Department of Labor, www.bls.gov/data/inflation_calculator.htm. Accessed 28 Jan. 2025. 
  5. "Panama Canal." Office of the Historian, U.S. Department of State, https://history.state.gov/milestones/1977-1980/panama-canal#:~:text=As%20the%2020th%20century%20progressed,relations%20between%20the%20two%20countries. Accessed 28 Jan. 2025.
  6. "Senate Leaders and the Panama Canal Treaties." U.S. Senate, www.senate.gov/about/powers-procedures/treaties/senate-leaders-and-the-panama-canal-treaties.htm. Accessed 28 Jan. 2025. 
  7. "Panama Canal." Office of the Historian, U.S. Department of State, https://history.state.gov/milestones/1977-1980/panama-canal#:~:text=As%20the%2020th%20century%20progressed,relations%20between%20the%20two%20countries. Accessed 28 Jan. 2025.   
  8. "Unleashing Certainty: The Catalytic Effects of the Panama Canal Expansion." IDB Invest, Inter-American Development Bank, idbinvest.org/en/blog/financial-institutions/unleashing-certainty-catalytic-effects-panama-canal-expansion. Accessed 28 Jan. 2025. 
  9. "Panama Canal Expansion: A New Era." Panama Canal Authority, 2011, https://pancanal.com/wp-content/uploads/2021/08/2011-english.pdf. Accessed 5 Mar. 2025. 
  10. "US $230 Billion Loan Agreement Signed for Panama Canal." CAF - Development Bank of Latin America, 2023, https://www.caf.com/en/currently/news/us-230-billion-loan-agreement-signed-for-panama-canal/. Accessed 5 Mar. 2025. 
  11. Tang, Didi, and Alex Veiga. "Hong Kong, Panama Canal, Beijing, Hutchison, BlackRock, Rubio." AP News, Associated Press, 4 Mar. 2025, apnews.com/article/hong-kong-panama-canal-beijing-hutchison-blackrock-rubio-d02a8439cc63d9e740e5154d4e0c56f6. Accessed 18 Mar. 2025. 
  12. "Notes on Tolls and Maritime Tariffs." Panama Canal, Panama Canal Authority, Jan. 2025, pancanal.com/wp-content/uploads/2021/08/Notes-on-tolls-maritime-tariffs-jan-2025-final.pdf. Accessed 28 Jan. 2025. 
  13. "What Is the Panama Canal Transit Fee?" Freightos, Freightos Group, www.freightos.com/glossary/what-is-the-panama-transit-fee/#:~:text=The%20calculation%20of%20the%20Panama,vessel's%20passage%20through%20the%20canal. Accessed 28 Jan. 2025. 
  14. "Panama Canal: Key to Global Trade." BBC News, BBC, www.bbc.com/news/articles/c2egwzvp080o. Accessed 28 Jan. 2025. 
  15. "Panama Lawsuit Requests Axing Hong Kong Firm’s Canal Concession." France 24, https://www.france24.com/en/live-news/20250204-panama-lawsuit-requests-axing-hong-kong-firm-s-canal-concession. Accessed 4 Feb. 2025.
  16. Dress, Brad. "Panama’s President: No Deal to Allow US Warships to Use Canal for Free." The Hill, 6 Feb. 2025, https://thehill.com/policy/defense/5130455-panama-canal-fees-us-rejection/. Accessed 5 Mar. 2025. 
  17. "Panama Canal Treaty: Frequently Asked Questions." U.S. Department of State, https://2001-2009.state.gov/p/wha/rlnks/11936.htm.  Accessed 5 Mar. 2025.
  18. "Toll Revenue Panama Canal." Port Economics Management, https://porteconomicsmanagement.org/pemp/contents/part1/interoceanic-passages/toll-revenue-panama-canal/. Accessed 5 Mar. 2025. 
  19. Feingold, Spencer. "'Unprecedented Challenges': Drought at the Panama Canal Disrupts Global Trade." World Economic Forum, 22 Aug. 2023, https://www.weforum.org/stories/2023/08/drought-at-the-panama-canal-poses-unprecedented-challenges-to-global-trade/. Accessed 5 Mar. 2025. 
  20. "El Niño and Climate Change Impacts Slam Latin America and the Caribbean in 2023." World Meteorological Organization, 2023, https://wmo.int/news/media-centre/el-nino-and-climate-change-impacts-slam-latin-america-and-caribbean-2023. Accessed 5 Mar. 2025. 
  21. Friesen, Garth. "Why the Panama Canal Is at the Center of a US-China Power Struggle." Forbes, https://www.forbes.com/sites/garthfriesen/2025/02/05/why-the-panama-canal-is-at-the-center-of-a-us-china-power-struggle/. Accessed 5 Mar. 2025. 
  22. "Examining the PRC’s Strategic Port Investments in the Western Hemisphere and the Implications for Homeland Security, Part I." Subcommittee on Transportation and Maritime Security Hearing, 11 Feb. 2025, 10:00 am - 1:00 pm, 310 Cannon House Office Building. https://homeland.house.gov/hearing/examining-the-prcs-strategic-port-investments-in-the-western-hemisphere-and-the-implications-for-homeland-security-part-i/. Accessed 5 Mar. 2025.