With anti-U.S. rallies on the streets and the star-spangled banner in flames, Panama hasn’t taken well to President Donald Trump’s vow to repossess its famous canal.

Since Trump’s surprising proclamation, Panamanian President José Raúl Mulino has been doing a delicate balancing act, trying to appease the new U.S. administration while containing domestic furor over its expansionist demands. Public disagreements on the canal transits of U.S. government vessels are just one sign of how hard it is for Mulino to please both sides.

The Panama episode billboards the new strategy toward Latin America taking shape in Trump 2.0’s first weeks: The administration is abandoning the idea of Pan-Americanism, according to which the U.S. tried to foster more cooperation and rules-based diplomacy even while still acting as the hegemon.

Instead, the region now faces an unapologetic ruler who bosses everyone around because the only language he knows is that of raw power. What better symbol of this new approach than a grab for the region’s most symbolic piece of infrastructure?

To be sure, Trump has gained some populist allies in the region he didn’t have when he took office in 2017, most notably Javier Milei in Argentina and Nayib Bukele in El Salvador. Chile, Colombia and Brazil may vote in right-wing governments within the next 20 months. He also has appointed the first Latino secretary of state. But the harshness of his take-it-or-leave-it approach will not only negate these advantages, but also give new force to the anti-Americanism that has long shaded relations between the U.S. and its southern neighbors, undermining their interest in cooperating and establishing common goals.

Trump’s insistence on blaming the region for U.S. problems — illegal migration, drug trafficking, trade imbalances or missed investments — has already brought far-reaching consequences: the cancellation of foreign aid, the threat of tariffs, a reversal of efforts to curb U.S. bribery abroad and the blatant betrayal of Venezuelan refugees in the U.S. by ending their humanitarian parole. As Trump bluntly told reporters asking about Latin America recently: “We don’t need them. They need us.”

This strongman strategy may play well with U.S. voters eager for quick fixes and nostalgic for an irretrievable past. But not so much with America’s neighbors, many of whose governments will likely pursue efforts at containment or closer alliances with more accommodating and generous countries (read China, already South America’s largest trading partner).

Americans have often failed to reckon with the roots of Latin America’s long-standing grievances, preferring to fall back on a series of myths catalogued by Temple University’s Alan McPherson. When Fidel Castro and his revolutionaries toppled a corrupt and tyrannical U.S.-backed government, for instance, President Dwight D. Eisenhower was quick to denounce and dismiss him a “madman.”

Earlier, the CIA had described the government of Guatemalan president Jacobo Árbenz, unseated by the U.S. in 1954, as “an intensely nationalistic program of progress colored by the touchy, anti-foreign inferiority complex of the ‘Banana Republic.’” Those are just a few of the all too many events that explain why the region’s anti-Americanism isn’t irrational or just cynically fueled by some local elites.

But suspicion and enmity toward the colossus to the north also coexist with an abiding appreciation for the value of good ties. (Naturally, Cold War-era U.S. officials pathologized this ambivalence as a form of “schizophrenia.”) As the historian Eric Zolov from Stony Brook University argues, Pan-Americanism has always been twinned with a U.S. tendency to aggressively advance its interests, jumbling the country’s republican principles with its imperial impulses.

“I don’t see these things as necessarily inconsistent,” Zolov told me. “The U.S. is very integrated with Latin America and the idea of being a good neighbor is already deeply embedded in our DNA. At the same time, we have lots of examples of serving our selfish interest. There has always been a back and forth.” Witness a 2023 study by Pew Research that shows strong pro-U.S. opinions in the region’s three largest economies after a decline in perceptions during Trump’s first mandate.

This ambivalence was on display during Secretary of State Marco Rubio’s trip to the region, where he mixed Trump’s hard talk with pledges of cooperation and partnership. Rubio doubtless saw the symbolic power of picking Latin America as his first overseas destination; but going to Central America also guaranteed some easy political wins out of the gate. The asymmetric relationship between the U.S. and Panama, El Salvador, Costa Rica, Guatemala and the Dominican Republic allowed him to act as a modern-day viceroy. Expect more turbulence in future engagements with Brazil, Mexico and Colombia.

The drawbacks of Trump’s all-stick, no-carrot strategy are unequivocal. Consider the disdain for his supposed partners: Panama is a close U.S. ally and a key player in its strategy to stop illegal migration — yet the president’s sudden obsession with the canal has poisoned the relationship with the conservative, pro-business Mulino from the start.

Trump has declined to exempt Argentina from the incoming 25% tariffs on steel despite his rapport with Milei; the president justified the measure saying the U.S. has a “little deficit” with the South American nation — even as U.S. data showed a $2 billion goods surplus with Argentina last year. Milei, who hasn’t publicly commented on the decision, was swiftly mocked by the Argentine press for the snub. And remember that during last year’s campaign, Trump criticized Bukele for “sending their murderers to the United States.” Friends without benefits.

Trump’s first term provides evidence of how unilateral bullying can backfire. In 2020, he succeeded in installing Mauricio Claver-Carone as head of the Inter-American Development Bank, breaking the long-standing tradition of a Latin American leading the region’s top development bank and creating a serious rift. Even the Brazilian government of Jair Bolsonaro, a Trump supporter, supported the decision to fire Claver-Carone two years later.

But that lesson seems to have been lost. Claver-Carone is now back at the White House as Trump’s special envoy for Latin America and calls the administration’s approach to the region “non-imperialistic expansionism.”

He lost me after “non.”

Trump seems to have misread Machiavelli’s advice that it is better to be feared than to be loved, forgetting that the Italian also urged princes not to overdo it: “While a ruler can’t expect to inspire love when making himself feared, he must avoid arousing hatred.

Actually, being feared is perfectly compatible with not being hated.” Machiavelli went on: “Above all, he mustn’t seize other people’s property. A man will sooner forget the death of his father than the loss of his inheritance.”

Words to the wise when it comes to the Panama Canal.

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

JP Spinetto is a Bloomberg Opinion columnist covering Latin American business, economic affairs and politics. He was previously Bloomberg News’ managing editor for economics and government in the region.

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