Oh, captain, (new) captain: Trump’s maritime masterstroke or navigational gamble?

Among the flurries of orders issued in the first hours post-inauguration, the current President of the United States Donald Trump has positioned Louis E. Sola at the very helm of the Federal Maritime Commission (FMC) and cast a long shadow over critical maritime issues.

As disclosed, Sola was first nominated back in November 2018, which was confirmed by the United States Senate on January 2, 2019.

Ever since, Sola served as Commissioner of the FMC, having assumed office that same month. He has now succeeded Daniel B. Maffei as Chairman, i.e. as the Chief Executive and Administrative Officer of the Federal Maritime Commission.

“I appreciate all the good work my colleague Daniel Maffei accomplished during his tenure as Chairman. He demonstrated strong leadership when the Commission was called on to respond to supply chain congestion issues. I enjoyed having the opportunity to work with him and appreciate that he gave individual Commissioners the freedom to work on issues where their strengths and experiences were most applicable,” said Chairman Sola.

Before he joined the commission, Chairman Sola was a soldier, entrepreneur and public servant, with 12 years of service in the US Army under his belt where his specialty was counterintelligence. It is understood that following his military career, he found his niche in consulting before launching a company specializing in yacht and mega-yacht sales.

Chairman Sola also served as a Commissioner on the Florida Board of Pilot Commissioners, a position to which he was appointed back in 2015.

“I am humbled by President Trump designating me Chairman and I am grateful for his confidence in my ability to lead the Federal Maritime Commission. There are many ways the Commission contributes to the competitiveness of American businesses, access to foreign markets for U.S. vessels and companies, and economic growth for the Nation,” Chairman Sola highlighted.

“We will continue that important work while looking for more instances where applying the authorities of the Commission helps U.S. companies and consumers.”

While inaugural addresses tend to follow the trend of reflections on domestic matters with some analyses of the world stage and America’s place on it, President Trump’s speech—to which it is believed that 24.6 million viewers tuned in from their televisions, in addition to the as-of-yet undisclosed number of in-person attendees—highlighted issues concerning the country’s position on a ‘considerably’ wider scale.

One of the most (in)famous parts of the President’s address was the matter of the Panama Canal. Specifically, the President vowed to “take back” the “foolish gift” that the United States had given away. One of the driving forces behind the pledge is linked to the country’s ‘everlasting’ political and economic rival: China.

“Panama’s promise to us has been broken. 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,” President Trump said. Soon after, he invoked the idea of ‘Manifest Destiny’, a 19th-century concept of American exceptionalism, i.e. the belief that America occupies a special place among the countries of the world.

As a brief reminder, the Panama Canal has a storied history that dates back to the early 16th century when Spanish explorers envisioned a waterway connecting the Atlantic and Pacific Oceans. But it was not until the 19th century that serious efforts began after the French, led by diplomat Ferdinand de Lesseps, initially attempted to construct the canal in the 1880s but were thwarted by engineering challenges and tropical diseases.

The United States took over the project in 1904 under President Theodore Roosevelt, implementing “innovative” construction techniques and medical advancements to combat diseases like yellow fever and malaria. The canal was completed in 1914, drastically reducing maritime travel time and transforming global trade routes. The canal remained under US control until 1999 when it was handed over to Panama following the Torrijos-Carter Treaties signed in 1977.

The canal is now managed by the Panama Canal Authority, an autonomous Panamanian government entity that has made long strides within the wider, global fight toward decarbonizing the maritime industry by (or around) 2050, seeking to transform the canal into an “integral global shipping hub”.

Panamanian President José Raúl Mulino stressed that there was “no presence of any nation in the world that interferes with our administration”.

Publicly available information corroborates the statement; as of now, there is no evidence that any private or state-owned Chinese company or the country’s military has any executive control over the canal’s operations.

Chinese companies do have a significant presence there, however. According to the Panama Canal Authority, for the year 2021, China accounted, in some capacity, for a share of 22.1% of traffic that year, coming in as second after the frontrunner, the United States, which accounted for 72.5%.

In addition to this, two of the ports adjacent to the canal, Balboa and Cristóbal—seated on the Pacific and Atlantic sides respectively—have been operated by a subsidiary of Hutchison Port Holdings, a Hong Kong-based business.

Hutchison Ports has heavily invested in the ports it operates near Panama. As an example, Balboa Port received a whopping $110 million for infrastructural expansion 10 years ago.

Soon after the inaugural address, President Mulino stated his stance, immediately reflecting on the claims over and regarding the canal.

“I must fully reject the statements made by President Donald Trump regarding Panama and its Canal and his inaugural address,” reads his post on X. “The Canal is and will continue to be Panamanian and its administration will remain under Panamanian control with respect to its permanent neutrality. We will exercise the rights that protect us, the legal basis of the Treaty, the dignity that distinguishes us and the strength provided by International Law as the appropriate path for managing relations between countries.”

As an indirect extension of Manifest Destiny, the United States has long envisioned the top seat by the shipping table. However, the country has fallen behind its Far Eastern rival owing to the fact that the country has largely been unable to produce oceangoing vessels at scale. To add to this, unlike China which has over 5,500 units sailing under its flag, the US boasts only 80 ships in international commerce.

An attempt to tip the scales in America’s favor and revitalize the nation’s maritime industry was made in December 2024 when the “New SHIPS for America Act” was introduced. As explained, this bill aims to breathe new life into the US Merchant Marine to transport vital goods and military cargo during times of conflict while reinforcing American supply chains in peacetime.

That said, an economic conflict between the United States and China has been ongoing since the beginning of 2018, causing disturbances within this landscape. This was aggravated when President Trump began imposing tariffs as well as other trade barriers on the Far Eastern rival in an attempt to force China to make changes to what the US described as “enduring, unfair trade practices”. Once he took office, President Biden kept the tariffs and appended additional levies to Chinese products such as solar panels and electric vehicles.

Ever since—and now going into President Trump’s second mandate—shipping stakeholders have grown increasingly anxious, issuing warnings about the potential repercussions of such policies. Namely, in September 2019, the six largest US West Coast ports—Port of Long Beach, Port of Los Angeles, Port of Oakland, Port of Portland, Port of Seattle and Port of Tacoma—underscored that the path the country was taking “would create irredeemable economic harm to employers, workers, residents and international partnerships along the West Coast and throughout the entire country.”

The status quo shifted very little and shows no promise of taking another direction at present, with President Trump vowing the US would remain aligned with his previous policies regarding China.

This came on the heels of recent federal-level developments that saw the government of the world’s most potent economic force taking further steps in addressing what it described as ‘unfair leverage of China’ over the world’s stage in the shipping industry, which controls about 80% of global trade.

In November 2024, in the wake of the elections, Norway-headquartered ocean and air freight rate benchmarking and market intelligence platform Xeneta warned that Trump’s victory could well be a ‘step in the wrong direction’ for international trade with importers fearing another spike in ocean container shipping freight rates.

Data from Xeneta shows that the last time Trump increased tariffs on Chinese imports during the trade war in 2018, freight rates spiked more than 70%. This time, the President pledged blanket tariffs of up to 20% on all imports into the US and additional tariffs of 60% to 100% on goods from China.

Although he claimed this would not result in ballooning prices for consumers, a new study published by the US National Retail Federation (NRF) spotlighted that American consumers face the possibility of losing anywhere between $46 and $78 billion in spending power annually if the new tariffs on imports to the US are implemented.

Peter Sand, Xeneta Chief Analyst, accentuated that shipping was a global industry feeding on international trade, in which context the next Trump Presidency would be a “step in the wrong direction”, with predictions it would not receive a warm welcome by US importers and exporters.

He concluded that ‘uncertainty’ was toxic for supply chains but that, given the status quo, the industry does possess a “clearer understanding” of the financial and operational risk which could enable stakeholders to execute the plans they have prepared now that President Trump has been re-elected.