Panama’s President José Raúl Mulino has announced plans to terminate a key development agreement with China, instead seeking closer collaboration with the United States. This move follows a high-profile visit from newly appointed U.S. Secretary of State Marco Rubio and mounting concerns from President Donald Trump over China’s influence in the strategic Panama Canal.
Panama Ends Belt and Road Agreement with China
Mulino declared that his country would not renew its 2017 memorandum of understanding with China’s Belt and Road Initiative, reaffirming Panama’s sovereignty over the 51-mile-long canal that connects the Pacific Ocean and the Caribbean Sea.
“I think this visit opens the door to build new relations and increase as much as possible U.S. investments in Panama,” Mulino stated after his meeting with Rubio.
The Panama Canal, a critical trade artery for global shipping, has become a focal point in the intensifying rivalry between Washington and Beijing. The U.S. Department of State estimates that approximately 72% of all vessels passing through the canal are either coming from or heading to a U.S. port.
Rubio’s Warning: China Must Not Control the Panama Canal
Rubio, who previously served as a senator from Florida before being appointed as Secretary of State, echoed the Trump administration’s firm stance on Chinese influence in Latin America.
“The United States cannot, and will not, allow the Chinese Communist Party to continue with its effective and growing control over the Panama Canal area,” Rubio wrote on X (formerly Twitter).
His remarks align with President Trump’s repeated claims that China exerts financial and operational control over the canal, reportedly imposing six-figure tolls on U.S. vessels. Trump has made it a priority to assert American influence over the waterway, citing national security and economic interests.
The Push to Reacquire the Panama Canal
In response to these concerns, House Republicans have introduced the Panama Canal Repurchase Act, a bill aimed at giving the U.S. government authority to negotiate the reacquisition of the canal. The legislation, spearheaded by Rep. Dusty Johnson (R-S.D.), underscores growing fears over Beijing’s strategic presence in Panama.
“President Trump is right to consider repurchasing the Panama Canal,” Johnson said. “China’s interest in and presence around the canal is cause for concern. America must project strength abroad—owning and operating the Panama Canal might be an important step toward a stronger America and a more secure globe.”
If passed, the bill would authorize the President and Secretary of State to initiate negotiations with Panama’s government to bring the canal back under U.S. control.
The Strategic Importance of the Panama Canal
Beyond trade, the Panama Canal plays a crucial role in U.S. national security. It serves as a key transit point for U.S. Coast Guard and Department of Defense vessels, ensuring rapid naval deployment between the Atlantic and Pacific Oceans. Without access to the canal, ships would need to travel an additional 8,000 miles around South America, significantly impacting military logistics and global commerce.
More than 10,000 ships utilize the Panama Canal each year, generating billions in toll revenue. Some U.S. lawmakers view the prospect of regaining control over the canal as an opportunity to boost American economic and strategic interests.
Rubio’s Broader Agenda in Panama
While the Panama Canal took center stage, Rubio’s discussions with Panamanian officials also touched on broader regional issues. The Secretary of State highlighted efforts to curb mass migration in the Western Hemisphere and ensure fair trade competition for U.S. firms operating in Latin America.
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With tensions rising between the U.S. and China over global trade and security, Panama’s decision to distance itself from Beijing could mark a turning point in Latin America’s geopolitical landscape.
Panama’s shift away from China and toward the U.S. raises critical questions: Will other Latin American nations follow suit in limiting Chinese investments? Or what are the implications if the U.S. moves forward with repurchasing the Panama Canal? Share your thought