China's Nicaragua Canal plan could trigger Trump's tough response, scholar warns

Chinese scholar Zhang Junhua has cautioned that U.S. President Trump is likely to adopt a hardline stance against Nicaragua should China revive its ambitious canal project. Zhang, a senior fellow at the European Institute for Asian Studies, believes Nicaragua could emerge as the next economic arena for U.S.-China competition.

Zhang noted that while Trump has not yet directly targeted Nicaragua, increased U.S. diplomatic pressure on Latin American nations might prompt Beijing to reconsider the stalled Nicaragua Canal initiative. This project, intended to connect the Pacific Ocean and the Caribbean Sea, has been in limbo for years. China's recent efforts to find alternatives to the Panama Canal, which saw its concession transferred from a Hong Kong subsidiary to European companies under U.S. pressure, underscore this strategic search.

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Nicaragua may become the next economic battlefield between the US and China.

Recent events in Latin America suggest a broader U.S. strategy to counter Chinese influence. Beijing has condemned the U.S. arrest of Venezuela's president, which facilitated Washington's control over the country's oil industry. China has also accused the U.S. of fabricating facts to justify sanctions against Cuba, a long-standing Chinese ally. Zhang suggests that Washington may now shift its focus to other countries in the region, including Nicaragua, Chile, and Peru, where China plans to develop infrastructure.

In response to U.S. pressure, China has accelerated other infrastructure projects in Latin America, such as the US$1.3 billion Chancay port in Peru. Zhang views the pursuit of the Nicaragua Canal as a strategic move for China, given the country's narrow terrain, which is suitable for such a cross-ocean waterway, similar to Panama. The original 2013 agreement for the $50 billion canal project with Hong Kong Nicaragua Canal Development Investment Co. (HKND Group) ultimately failed, with the company going bankrupt and the concession being revoked by Nicaragua in 2024. Nicaragua later selected a new canal route and partnered with China's CAMC Engineering, though engineering and environmental challenges remain.

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Nicaragua's future may be subject to American influence.