Question

How did the construction of the Panama Canal affect American trade?

Answer 1

The Panama Canal is an artificial 82 km waterway that cuts across the Isthmus of Panama, connecting the Atlantic Ocean with the Pacific Ocean. Its construction began in 1881 by the French government but stopped it due to engineering problems and a high worker mortality rate. Afterward, the United States took over the project in 1904 and opened the canal on August 15, 1914, allowing ships to avoid sailing another 5,000 miles around the southern tip of South America, representing a conduit for maritime trade.

In this sense the construction of the Panama Canal affects American trade in a positive way since it keeps the cost of imported goods down, reducing inflation. Additionally, the Five ports that carry 70 percent of U.S. ship imports (the port at Los Angeles/Long Beach, New York/New Jersey, Seattle/Tacoma, Savannah, and Oakland) are able to receive Post-Panamax ships, which makes the U.S. transportation system run more efficiently, relieving congestion in such ports. As well as giving to U.S. exporters better access to China and other Asian markets.

Answer 2

It greatly improved commerce between America and the Asian powers. Before the Canal was built, the closest maritime route was to go down all the South American coast, to then cross from the Atlantic to the Pacific Ocean, over the south of Argentina, which was very costly because besides the long journey, the sea current at that point (south of Argentina) goes from the Pacific to the Atlantic, and it's known to be a hard passage to sail, what makes it a very slow point for the freighters.

And even though the two biggest seaports in the USA are located on its west coast, it's not always best to export all goods produced in the country throgh them, due to logistic issues. Depending on the region they were produced, sometimes it would be even cheaper to export them from New York/New Jersey, even before the Panama Canal.

Because of these reasons, even with the extreme high taxes to cross it (proportional to the bulk being tranported), it's way more profitable for american companies to export its goods and passengers on cruises to Asia or even countries/cities in American continent with their coast bathed by the Pacific, through the Canal.