Donald Trump has vowed to "take back" the Panama Canal, saying it was "foolishly" given to the Central American country by the US.
During his speech at his inauguration in Washington DC, the new president said American ships using the vital waterway, including those in the US Navy, were being "severely overcharged and not treated fairly".
In response, Panama's president Jose Raul Mulino said on X that the canal "is and will continue to be Panamanian".
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The late US president Jimmy Carter signed over the canal to Panama during his presidency in the 1970s.
Mr Trump claimed in his speech that rival China was operating the canal and "we didn't give it to China, we gave it to Panama, and we're taking it back".
The Panama Ports Company, controlled by Hong Kong-based CK Hutchinson Holdings, has long managed two ports near canal entrances.
Panamanian authorities have launched an audit of the Panama Ports Company, coinciding with Mr Trump's threats.
Mr Trump also said of the canal: "We have been treated very badly from this foolish gift that should have never been made. And Panama's promise to us has been broken."
"The purpose of our deal and the spirit of our treaty has been totally violated," he claimed.
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The canal, located on the outskirts of the capital, Panama City, is one of the world's busiest trade passages.
It is a 51-mile artificial waterway that connects the Pacific and Atlantic Oceans through Panama, saving ships thousands of miles and weeks of travel around the southern tip of South America.
In 1977, Mr Carter signed a treaty with Panamanian military leader Omar Torrijos that granted Panama free control over the canal and guaranteed the waterway's permanent neutrality.
This took effect on 31 December 1999. The canal has since been administered by the Panamanian government's Panama Canal Authority, and remains a key source of income for the country.
Last month, Mr Trump threatened to reimpose US control, citing what he said were excessive fees to use the canal and a risk of Chinese influence.
"It was given to Panama and the people of Panama, but it has provisions," Mr Trump said of the canal at the time.
"If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, then we will demand that the Panama Canal be returned to us, in full, quickly and without question."
(c) Sky News 2025: Donald Trump says US 'taking back' Panama Canal - but Panama's president has defiant message
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