Panama rejected suggestions of Chinese influence over its canal and dismissed threats of possible US military action on January 7, after President-elect Donald Trump refused to rule out force to regain control of the strategic waterway.

The diplomatic row erupted after Trump, speaking at his Mar-a-Lago club in Florida, complained about canal transit fees and claimed American warships were charged more than vessels from other nations. He criticised the 1977 Torrijos-Carter Treaties that transferred the canal's control to Panama in 1999, calling it "a mistake that cost [President Jimmy] Carter the election."

Asked whether he would consider military or economic measures regarding the canal – which handles about 5% of global seaborne trade – Trump said he "cannot rule out either of those options," adding that action "may be needed" for US economic security.

This follows earlier inflammatory remarks made by the President-elect at a rally in Arizona on December 22, where he first floated the possibility of wrestling back control of the canal and cautioned about alleged Chinese influence over the key maritime passage.

Panama’s Foreign Minister Javier Martinez-Acha responded forcefully on January 7, declaring the canal's sovereignty "non-negotiable" and denying Trump's claims about potential foreign control. "The only hands operating the canal are Panamanian and that is how it is going to stay," Martinez-Acha said. He also refuted suggestions of any negotiations over the waterway's control, stating Panama had received no offers.

President Jose Raul Mulino had previously addressed claims about Chinese involvement in a December message, stating emphatically that "there are no Chinese or Chinese troops in the Panama Canal." The government maintains that transit fees are established through public consultation without discrimination against any nation.

While Chinese state-owned firms are not directly operating the canal, Hong Kong-based CK Hutchison Holdings manages two ports at the canal's entrances, raising some security concerns among experts. China is the second-largest user of the canal after the United States.

The controversy has sparked regional solidarity, with over 20 former foreign ministers from Latin American countries, including Mexico, Chile, Ecuador, Peru, Costa Rica, and Argentina, issuing a joint statement supporting Panama's sovereignty. They praised Panama's responsible management of the canal and its contribution to international maritime trade.

Trump's combative stance extends beyond Panama. At the same press conference, he declined to rule out using force regarding Greenland, a self-governing Danish territory he has previously expressed interest in acquiring, and made claims about Canadian territory.

Danish Prime Minister Mette Frederiksen reaffirmed that "Greenland is not for sale," while Canadian Prime Minister Justin Trudeau declared that "Canada will never, ever be part of the United States."

Panama's government pointed out that until January 20, relations remain under the Biden administration, after which they will engage with Trump's government through appropriate diplomatic channels. They stressed their commitment to maintaining excellent relations with different US administrations while firmly defending their sovereignty over the canal.

The Panamanian authorities also corrected Trump's false claims about American casualties during the canal's construction, noting that the majority of the workforce comprised more than 20,000 workers from the Antilles.