The Rundown - Deep Dive: The Economic Power Struggle Over the Panama Canal

Episode Date: March 9, 2025

For over a century, the Panama Canal has been a vital artery of global trade and a symbol of U.S. economic dominance. But in 2025, it’s back in the headlines—Donald Trump is calling to reclaim it, and BlackRock has just acquired key ports on either side of the canal. This episode unpacks the history of U.S. control, why BlackRock is making moves, and how China fits into this high-stakes geopolitical battle. From trade wars to strategic assets like Greenland, we explore why control over shipping routes is more critical than ever.***The content of the video is for general and informational purposes only. All views presented in this show reflect the opinions of the guest and the host. You should not take a mention of any asset, be it cryptocurrency or a publicly traded security as a recommendation to buy, sell or hold that cryptocurrency or security. Guests and hosts are not affiliated with or endorsed by Public Holdings or its subsidiaries. You should make your own financial and investment decisions or consult respective professionals. Full disclosures are in the channel description. Learn more at Public.com/disclosures.Past performance is not a guarantee of future results. There is a possibility of loss with any investment. Historical or hypothetical performance results, if mentioned, are presented for illustrative purposes only. Do not infer or assume that any securities, sectors or markets described in the videos were or will be profitable. Any statements of future expectations and other forward-looking statements are strictly based on the current views, opinion, or assumptions of the person presenting them, and should not be taken as an indicator of performance nor should be relied upon as an investment advice.

Welcome back to the rundown for a weekend deep dive. Today, we are talking about the Panama Canal. This 110-year-old engineering marvel is still at the center of geopolitical drama. This canal is more than just cargo ships squeezing through a narrow man-made ditch. That's why these days Donald Trump has become fixated on the canal and wants the U.S. to take it back. Black Rock also just spent billions of dollars buying up ports on both ends. And of course, you have China lurking in the background trying to strengthen the. its own influence in the region. So why is everyone suddenly obsessed with this canal again?

That's what we're talking about today. Let's break it down. Now to really understand why the Panama Canal still matters, we got to do a bit of a history lesson and go all the way back to the late 1800s. Back then, France was one of the biggest superpowers in the world, and they had just built the Suez Canal in Egypt. So they were feeling pretty good about themselves and thought they'd try again in Panama, and let's just say it didn't go as well. Thousands of workers died from malaria and yellow fever, and the engineering turned out to be a nightmare, which caused France to quickly go bankrupt, and they abandoned the project in 1889. That's when U.S. President Teddy Roosevelt stepped in. He saw the canal as the ultimate power move, both for trade and military

dominance. But there was just one little issue. At the time, Panama was part of Colombia, and Colombia wasn't exactly excited to hand over this giant chunk of land. So what did the U.S. do? Well, they helped Panama gain their independence and become its own country. The U.S. did this by using what's called gunboat diplomacy. U.S. warships were sent along the Panama Atlantic and Pacific coast, and that was key for Panama winning its independence from Colombia. In exchange for the help, the U.S. was rewarded with the right to build the canal. Panama became an independent country in 1903, and construction of the Panama Canal started in 1904. Fast forward 10 years of all the engineering marvel that went into constructing the canal,

It officially opened in 1914, and suddenly shipping between New York and San Francisco went from a two-month odyssey around South America to just a couple weeks through this man-made shortcut. When I say game changer, I mean, this was truly a cheat code for global trade, and the U.S. held that controller for 85 years. But see, the people of Panama, they weren't so thrilled with the U.S.'s control of the canal. They saw the Panama Canal Zone as a form of colonialism. The uprising tensions ultimately led to the Panama riots of 1964. And these riots were deadly, about 21 Panamanian protesters, and four U.S. Marines died during these riots. In fact, the U.S. embassy in Panama City had to be evacuated.

So the riots led to deteriorating diplomatic relationships between the two countries, and a new treaty was negotiated by President Jimmy Carter back in the 70s that began the transition of control of the canal back to the people of Panama. Panama officially took over control of the canal on December 31st, 1999, and it looks like Donald Trump still hasn't moved on from that breakup. So let's talk about Donald Trump's obsession with the Panama Canal. Trump's been saying since at least 2016 that giving away the Panama Canal was a disaster. And lately, he's floated the idea that the U.S. should just take it back. I mean, the fact that Panama was Marco Rubio's first international visit as Trump's Secretary of State shows how much he's seen.

to care about the situation there. And it looks like this rhetoric from Trump might have played a big factor in the big news this week that Black Rock is buying two major ports in the Panama Canal from the Hong Kong-based company, C.K. Hutchinson. We're going to talk more about that deal and why Black Rock is getting involved in just a bit. Now, canals aren't Trump's only real estate obsession.

Remember, back in 2019, Trump wanted to buy Greenland from Denmark. And he still brings up Greenland today. See, both Greenland and Panama have something in common. They're both strategic trade routes. The Panama Canal has been that for over 100 years now, and Greenland is set to become one as Arctic ice starts to melt. And Trump wants to get control of these routes to keep China at bay. See, China has been investing heavily across Latin America over the last few years.

They're building ports, rail lines, telecommunication infrastructure. They're essentially trying to secure their own trade influence in the region, which is starting to make the U.S. kind of uneasy. These concerns intensified in 2017, when Panama cut ties with Taiwan in favor of China, opening the floodgates for additional investments in Panama from China. That includes everything from a free trade agreement to infrastructure projects to newly launched direct flights between China and Panama. So Trump's fixation on the canal isn't just nostalgia. It seems to be part of a U.S.-China rivalry and Trump's goals to push back China's influence on a major piece of trade infrastructure.

And that's why the news of BlackRock getting involved comes. in at an interesting time. So let's talk about that. Now we are a finance news podcast, so we have to talk about Black Rock swooping in this week to take over two major ports at the Panama Canal. BlackRock, the $10 trillion asset management behemoth, is dropping $23 billion to buy a bunch of ports around the world from the Hong Kong-based company, C.K. Hutchinson. Two of those ports are at the Panama Canal. This deal gives BlackRock and its consortium of investors about 90% ownership in the controlling company of the two major ports. And so that's, ports in the Panama Canal, one port being the Balboa port, which is on the Pacific side,

and then the other port is the Cristobal port, which is on the Atlantic side. On top of the Panama ports, they're also getting 80% of C.K. Hutchinson's global port business, which operates a total of 43 ports worldwide. So this deal is for more than just the Panama Canal. But why does BlackRock, a company known for creating ETFs, want to do with ports? I mean, I got a couple of ideas. You know, money, power, and most likely influence and a potential. pat on the back from the president of the United States. I'm going to talk more about that in a bit. I didn't want to clear up some confusion about this deal.

This deal doesn't mean that Black Rock now owns the Panama Canal itself. The canal is still owned and operated by the Panamanian government through the Panama authority. But the two ports that BlackRock acquired are the busiest ports in Panama, processing nearly 40% of the cargo that flows through the canal. And these ports are kind of like a toll booth. Not every ship stops at them, but when ships do, stop at these ports to process cargo, they pay a toll to the port which Black Rock thinks will

offer a solid return in the long term. But here's the real team. Some are speculating that BlackRock CEO Larry Fink purchased the ports as sort of a gift or a favor for President Trump. And Trump was quick to take credit even before the deal was officially announced. In an address in front of Congress on Tuesday night, President Trump said the U.S. would reclaim the Panama Canal and added that the U.S. had already started doing it, likely referring to the Black Rock. deal without specifically dropping their name. Now on the other end, the owner of the port, C.K. Hutchinson, emphasized in a press release that the deal was purely commercial in nature, but yeah, I'm sure everybody believes that, right? Now, a bit more info on C.K. Hutchinson,

the company is part of a conglomerate formed by Lee Kha Xing. He was once Hong Kong's richest man. The company had been struggling recently with shares down 40% over the last five years, but news of this deal sent the stock up 20% in a single day. So once this deal officially closes, ports will be back in U.S. friendly hands. As far as the Panama Canal as a whole, it hasn't been smooth sailing for them lately either. Right now, they're struggling with drought. You know, climate change is making water levels drop so fewer ships can pass through. That's driving up toll prices, creating shipping delays, and sending some companies

searching for alternatives. Like Mexico is building a rail corridor across the isthmus of Tohontepaq to serve as an alternative. But as of right now, the canal still processes 5% of all global trade. with 40% of U.S. container traffic from Asia passing through there. In fact, the U.S. is the canal's number one customer, and China is number two. So even with all these challenges, the canal is facing Black Rocks, seems to think the canal will continue to play a big role in global trade.

And it probably doesn't hurt getting a pat on the back from the president of the United States in the process. So what's the big takeaway here? Well, the Panama Canal isn't just some old engineering marvel like the Taj Mahal or the Egyptian pyramids that's turned into a tourist trap. The canal is still a high-stakes piece of the global economy. And that explains Trump's obsession over the canal. China's growing presence in the region. And why BlackRock just spent billions of dollars to buy the ports.

Seems like whoever controls the canal will have a big influence on global trade. And in 2025, that fight is just heating up. Well, all right, guys, that's it for this weekend's deep dive. Thank you so much for spending part of your weekend with us. If you like today's episode, consider giving us a five-star rating on Apple or Spotify. Check us out on YouTube as well. These deep dive episodes are recorded with video with some helpful graphics and charts. So if you want to watch the video version, you can on YouTube or Spotify.

And if you guys have topics that you want us to break down in future deep dives, let us know in the comments. Thank you guys so much for listening. Shout out to Mike and Connor for all the help behind the scenes. And we'll see you guys back here on Monday.