Rubio’s visit to Panama resulted in the first foreign policy victory for the Trump administration, but there is more to be done.
After meeting with U.S. Secretary of State Marco Rubio, Panamanian President José Raúl Mulino announced that Panama will back out of the China-funded global infrastructure program. This decision is a notable victory for the Trump administration, but more action is needed to address China’s influence over the Panama Canal.
The United States constructed the Panama Canal in the early 20th century, later returning control to Panama through a treaty signed by former President Jimmy Carter in 1977. The Canal remains vital for U.S. economic and strategic interests. According to the Center for Strategic and International Studies (CSIS), the Panama Canal is “a major gateway between the Atlantic and Pacific Oceans and a provider of lower shipping costs for U.S. and global trade.” Importantly, more than 60 percent of the goods that pass through the Canal either originate in or are destined for U.S. markets, making equal access essential for U.S. national security and economic well-being.
Over the years, China has emerged as the second-largest user of the Panama Canal, regarding it as a key entry point for exerting its economic, diplomatic, and political influence throughout Latin America. The last three decades have seen an increase in China’s economic endeavors in Panama.
Since 1997, when Beijing took control of Hong Kong, Hutchison Ports, a subsidiary of Hong Kong-based CK Hutchison Holdings, has been operating the Balboa and Cristobal ports on the Panama Canal. In 2022, the Panamanian government extended Hutchison’s lease for these ports for an additional 25 years.
During Trump’s first term, China’s economic and political influence in Panama grew significantly. In 2016, Landbridge Group, a prominent Chinese firm, made headlines by acquiring control of Margarita Island, the largest port on the canal’s Atlantic side, for a staggering $900 million. Following this move, Landbridge established a subsidiary named Panama Colon Container Port Inc. (PCCP), partnering with China Communications Construction Company (CCCC) and the China Harbor Engineering Company (CHEC) to develop a deep-water port specifically designed for mega-ships.
