Donald Trump’s preposterous threats to seize control of the Panama Canal arrive against a backdrop of his companies’ troubled financial history in the Central American nation, including allegations of systematic tax evasion that remain unresolved in federal court.
Trump sparked international tension this weekend by declaring Panama’s canal fees “ridiculous” and suggesting the U.S. could demand the return of the strategic waterway. But court documents reveal his organizations’ own challenged relationship with Panamanian taxation.
In 2019 filings to the U.S. District Court in New York, Trump’s companies faced accusations of failing to pay required 12.5% taxes on millions in management fees from a Panama City hotel project. The lawsuit, filed by private equity manager Orestes Fintiklis and Ithaca Capital Partners, alleged Trump entities deliberately evaded Panamanian tax obligations and social security payments by misreporting employee numbers.
“Had Trump been honest with Ithaca about its failure to pay taxes on the management fees it earned and its failure to properly report employee salaries to Panama’s social security agency, Ithaca would have never entered into the [licensing deal],” the 2020 court filing stated. The timing hasn’t escaped notice. Political commentator Ana Navarro Flores suggested on social media that Trump’s sudden interest in controlling the canal stems from his companies’ outstanding tax issues in Panama.
While no direct evidence links the tax case to Trump’s canal threats, his pattern of using political power to address personal legal exposure has precedent. The president-elect’s demands that Panama reduce fees and cede control echo similar territorial claims he’s made toward Greenland and Canada—often couched in national security terms while overlapping with his business interests.
“The fees being charged by Panama are ridiculous, especially knowing the extraordinary generosity that has been bestowed to Panama by the U.S.,” Trump posted on Truth Social. He later added an image of an American flag over the canal declaring, “Welcome to the United States Canal!”
The Panama Canal stands as one of America’s most ambitious engineering achievements—and most complex diplomatic legacies. After supporting Panama’s independence from Colombia in 1903, the U.S. began construction of the 51-mile waterway connecting the Atlantic and Pacific oceans. The massive project claimed 5,600 workers’ lives before opening in 1914.
Though the U.S. controlled the canal for most of the 20th century, growing Panamanian dissatisfaction led to the 1977 Carter-Torrijos treaties, which transferred full control to Panama in 1999. Of critical note is that Ronald Reagan, Trump’s Girardian model and Gerald Ford’s primary opponent in 1976, opposed the treaty. The canal remains crucial for global shipping, saving vessels from a 7,000-mile detour around South America’s Cape Horn.
Panama’s President José Raúl Mulino forcefully rejected Trump’s suggestions: “Every square meter of the Panama Canal and its adjacent areas belong to Panama and will continue belonging to Panama.”
The canal dispute highlights the unprecedented scenario of a returning U.S. president threatening to seize territory from an ally while his companies remain entangled in that nation’s legal system. The tax evasion allegations, which claim Trump businesses pocketed millions meant for Panama’s treasury, add context to his accusations of Panama overcharging American interests.
As one federal court filing noted, Trump companies “intentionally” evaded taxes while “[lining] its pockets with ill-gotten management fees.” Now, as president-elect, Trump claims Panama is the one imposing unfair costs. The litigation continues in federal court as Trump prepares to retake office, creating potential conflicts between his roles as defendant and commander-in-chief—particularly if he follows through on ridiculous threats to “demand” control of the Panama Canal.
Published: Dec 23, 2024 11:21 pm