Crucial global trading routes and tariffs on major trading partners are now the highlights of what is the beginning of a new Trump era.
Since his first term, President Donald Trump has expressed interest in Greenland and Panama which is also home to the northernmost U.S. military base.
Greenland is a highway from the Arctic all the way to North America, to the United States,” he told Fox News in an interview. “It’s strategically very important to the Arctic, which is going to be the critical battleground of the future because as the climate gets warmer, the Arctic is going to be a pathway that maybe cuts down on the usage of the Panama Canal.
While Greenland is not (yet) a sovereign state under international law, it is still an autonomous territory within the Kingdom of Denmark. On the other hand, Panama Canal is controlled by the Panama government since 1999.
The Arctic route—a geopolitical linchpin
The region with its mineral resources is also the world’s largest island between the U.S., Russia and Europe. But that’s not the real goal of the countries interest in Greenland.
In the Arctic, two shipping lanes are navigable during the summer—Northwest Passage or Northern Sea Route (which transits Canada and the U.S.) and Northeast Passage (which follows the Russian Arctic coast and continues into Europe). For most part of the year, the Arctic passage was always used infrequently due to thick ice. But now scientists are predicting that by 2035, parts of the Arctic will be ice free during the summer months.
With changing weather patterns, the ice-free periods along these shipping routes are extending, warming the region four times faster than the rest of the globe and increasing the area for navigation ice-free.
Arctic shipping traffic has already by 37% over the past decade, according to the data compiled by the Arctic Council. At an average speed of 20 knots, the Northwest Passage takes 14 days from key port of U.K. to Vancouver, Canada, in comparison to 18 days via the Panama route.
The Panama Canal route: an economic lifeline
This brings us to the Panama Canal, a route which has sparked the interest of Donald Trump.
Trump has expressed concerns over the canal’s management and fees, suggesting that a U.S. control means more favorable terms for American interests.
“China is operating the Panama Canal, and we didn’t give it to China, we gave it to Panama, and we’re taking it back.”
- Trump in his inaugural speech
Considered to be one of the fastest and efficient ways, the Canal connects to all parts of the world and is the only port of the world with two oceans, connecting the Pacific Ocean with the Caribbean Sea and the Atlantic Ocean.
U.S. has been the largest user of Panama Canal with total commodity export and import representing 75% of the Canal’s traffic, followed by China which accounts for roughly 21% of the cargo traffic.
The shipping time for ocean cargo from Shenzhen, China, to Miami, Florida, using the Suez Canal takes 41 days, which is six days more via the Panama Canal, which is more expensive. The Canal serves more than 180 maritime routes connecting 170 countries and reaching some 1,920 ports in the world, handling roughly 5% of the global trade.
Similarly, a ship from New York City to San Francisco is 7,800 miles shorter via the Panama Canal, in comparison to via Cape Horn, which is 13,000 miles.
The canal is critical to U.S. imports of autos and commercial goods from Asia, and also for U.S. exports of commodities which includes liquefied natural gas. The waterway is an important route for petroleum products and LNG traveling from the U.S. Gulf Coast to western South America and Asia.
But in the past, disruptions to the canal route have resulted in higher freight costs due to longer routes and higher insurance costs, translating into increased transit time and costs, adding up to 8,000 miles of travel around South America, which often involves traversing dangerous waterways.
Gatún Lake, key to the canal’s operation, faced a severe drought triggered by El Nino, a global weather phenomenon originating in the Pacific Ocean, led to 25% decrease in transits since October 2023. To address this, the Panama Canal Authority plans to invest $900 million in a new reservoir to increase daily transit capacity by 11 Panamax vessels by 2028.
Both the routes around Greenland and Panama highlight their pivotal roles in navigating geopolitical and economic challenges.
A new Arctic shipping route, the Trans-Arctic Shipping Route
A great but pending interest to China since the route is expected to shorten the Europe–Asia journey by nearly two days, leading to reduction of fuel consumption by 40%. Much of the route passes through international waters, potentially reducing conflicts with Arctic nations but so far, it remains a distant dream.
Two years ago, with the intention of becoming the first-ever nonstop circumnavigator across the Arctic Ocean, Chinese sailor Zhai Mo set out to sail through the Northwest Passage in four months. However, the journey took a year and a half and was reportedly interrupted by an iceberg.
While Trump’s focus on Greenland and the Panama Canal highlights their pivotal roles in navigating geopolitical and economic challenges, both Greenland and Panama have made it clear that while they are open to international cooperation, their sovereignty remains non-negotiable.
Panama’s leadership had rejected Trump’s assertions regarding the Panama Canal. President José Raúl Mulino had previously reaffirmed that the canal is under Panamanian control and will remain so, dismissing claims of external influence or unfair practices. He emphasized that every part of the canal belongs to Panama and is non-negotiable. In his recent talks with the U.S. Secretary of State Marco Rubio in Panama City, he said he would review agreements involving China and Chinese businesses. He announced further cooperation with the U.S. on migration, but maintained that his country's sovereignty over the world's second busiest waterway is not up for discussion.
Greenland’s Prime Minister Múte Egede said, “Greenland is not for sale, but we are open to strengthening cooperation with the United States. We value our autonomy and the will of our people to decide our future.”