Panama to End Major China Deal, Strengthen Partnership with U.S.

Panama’s President José Raúl Mulino announced on Sunday that his government will not renew a major development agreement with China, signaling a strategic shift toward closer cooperation with the United States. The decision came shortly after a meeting with U.S. Secretary of State Marco Rubio and amid growing pressure from President Donald Trump’s administration.

The cancelled deal, a key component of China’s Belt and Road Initiative (BRI), had sparked domestic and international concern over potential threats to Panama’s sovereignty and control of the 51-mile-long Panama Canal, one of the world’s most critical maritime trade routes connecting the Pacific Ocean and the Caribbean Sea.

President Mulino reaffirmed that Panama’s full authority over the canal will remain non-negotiable, describing the decision as one rooted in national interest and strategic alignment.

“This visit marks a new beginning—an opportunity to deepen our relationship with the United States and expand American investment in Panama,” Mulino said following his discussions with Rubio, who made Panama his first international destination since assuming office.

The announcement underscores Panama’s growing effort to rebalance its foreign policy away from Beijing and toward Washington, at a time when geopolitical competition in Latin America is intensifying

Rubio Urges U.S. to Reclaim Control of Panama Canal During Official Visit

During his first international visit as U.S. Secretary of State, Marco Rubio met with officials at the U.S. Embassy in Panama, commending their efforts in advancing President Donald Trump’s “America First” foreign policy. In a post on X, Rubio expressed gratitude to embassy staff and stressed the importance of deepening the strategic partnership between the United States and Panama.

While addressing the issue of the Panama Canal, Rubio delivered a firm message:

“The United States cannot—and will not—allow the Chinese Communist Party to expand its influence or control over the Panama Canal.”

His remarks echoed growing concerns from President Trump, who has long criticized China’s involvement in canal operations, particularly as Beijing reportedly imposes higher transit fees on American vessels. The Panama Canal, constructed by the U.S. and completed in 1914, was officially handed over to Panama in 1999 under an agreement initiated during President Jimmy Carter’s administration. Since returning to office, Trump has made reclaiming U.S. control over the canal a key foreign policy objective.

In response, House Republicans have introduced the Panama Canal Repurchase Act, which would empower the U.S. president—working with the Secretary of State—to negotiate with Panama for reacquisition of the canal. Representative Dusty Johnson (R-S.D.), a member of the House Select Committee on China and the Transportation and Infrastructure Committee, strongly backed the proposal, stating:

“President Trump is right to consider repurchasing the Panama Canal. China’s growing influence in the region is a real concern. Reasserting U.S. control would strengthen our position globally and enhance national security.”

According to the U.S. Department of State, roughly 72% of all ships passing through the canal either depart from or are bound for American ports, underscoring its importance to U.S. trade and defense logistics. The canal also serves as a critical passageway for the U.S. Coast Guard and military vessels; without it, ships would face an 8,000-mile detour around South America.

Johnson’s office emphasized the potential economic benefits of U.S. ownership, noting that more than 10,000 ships transit the canal annually, generating billions of dollars in toll revenue.

Beyond the canal issue, Rubio’s discussions in Panama also focused on addressing regional migration challenges and ensuring fair competition for U.S. businesses operating in the country. His visit underscored Washington’s renewed effort to counter Chinese influence in Latin America and reassert U.S. leadership in the Western Hemisphere.

Cruz Sounds Alarm on China’s Expanding Influence Over Panama Canal, Citing U.S. Security Threats

Senator Ted Cruz has voiced serious concerns about China’s deepening involvement in the Panama Canal, warning that it poses “acute risks” to U.S. national security. Speaking during a Senate Commerce, Science & Transportation Committee hearing, Cruz alleged that the Chinese Communist Party (CCP) is taking a “strategic and militaristic interest” in the critical trade route connecting the Pacific Ocean and the Caribbean Sea.

Cruz highlighted China’s role in constructing a bridge across the canal and its control over container ports at both ends, suggesting that such influence could give Beijing the power to disrupt or block maritime traffic at will.

“Chinese firms have been building a bridge across the canal for nearly a decade and already control the ports at both ends. This effectively gives China the means to obstruct canal traffic whenever it chooses—a direct threat to U.S. national security,” Cruz warned.

The senator also criticized the high tolls U.S. vessels pay to use the canal, noting that warships face additional charges, which he said contribute to the canal’s over $3 billion annual revenue. According to Cruz, those costs are ultimately passed on to American taxpayers and consumers, driving up prices for imported goods.

Cruz’s warning comes just as Secretary of State Marco Rubio prepares for his first foreign trip—to Panama—where he is expected to discuss trade relations and foreign influence in the region. Rubio’s visit follows President Donald Trump’s recent remarks accusing China of operating the canal and vowing to “take it back.”

However, Panamanian President José Raúl Mulino has firmly denied claims of Chinese interference, stating, “No foreign power influences or interferes in our administration of the canal.”

Contradicting that assertion, Louis Sola, Chairman of the Federal Maritime Commission, testified that China’s footprint in Panama has expanded considerably since 2015, when Panama joined the Belt and Road Initiative and cut diplomatic ties with Taiwan. Sola noted that state-owned Chinese enterprises have won multiple infrastructure contracts—some near the canal—often without competitive bidding, raising transparency and security concerns.

Sola further warned that several of these companies maintain ties to China’s People’s Liberation Army, deepening fears that Beijing could leverage its economic role in Panama for geopolitical advantage.

As China’s involvement in Panama continues to grow, U.S. lawmakers—including Cruz—are calling for a stronger policy response to curb Beijing’s influence across Latin America and safeguard U.S. strategic interests in the hemisphere.

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