In a significant geopolitical shift, Panamanian President José Raúl Mulino announced on Sunday that his administration will not renew the country’s agreement with China’s Belt and Road Initiative (BRI)—a move that underscores the growing competition between the United States and China for influence in Latin America. This decision follows a high-level meeting between President Mulino and U.S. Secretary of State Marco Rubio in Panama City.
The announcement marks a major setback for China’s global ambitions, as Panama was the first Latin American nation to join the BRI. The decision also aligns with former U.S. President Donald Trump’s long-standing criticism of Panama’s increasing ties with Beijing, particularly regarding its impact on the Panama Canal, a waterway that remains a cornerstone of global trade and U.S. national security.
Panama’s Break with China: A Blow to Beijing’s Global Expansion
Panama’s withdrawal from the Belt and Road Initiative deals a serious blow to China’s efforts to expand its economic and political footprint in the Western Hemisphere. The BRI, often referred to as Beijing’s modern-day Silk Road, is an ambitious infrastructure project that has allowed China to establish strategic partnerships worldwide by funding and building large-scale projects such as highways, ports, railways, and energy infrastructure.
China’s growing involvement in Panama has been a point of contention for Washington, as the United States views Chinese influence over critical infrastructure as a potential threat to regional stability. While China presents the BRI as an economic development initiative, critics argue that it serves as a tool for Chinese geopolitical leverage, often trapping developing nations into financial dependency on Beijing.
By stepping away from the initiative, Panama becomes the first Latin American nation to reverse its course on the BRI—a move that signals a potential domino effect for other countries in the region.
U.S. Concerns Over the Panama Canal’s Security
The Panama Canal, one of the most crucial waterways in global trade, has been at the center of this growing dispute. Built and operated by the United States until 1999, the canal was transferred to Panama under the terms of a treaty negotiated by former U.S. President Jimmy Carter in the late 1970s. However, the increasing presence of Chinese businesses operating ports near the canal has raised alarm bells in Washington.
During his meeting with President Mulino, Secretary Marco Rubio explicitly warned that China’s influence in Panama represents a direct threat to the security of the waterway, potentially violating the terms of the Panama Canal Treaty.
“Secretary Rubio made clear that this status quo is unacceptable and that absent immediate changes, it would require the United States to take measures necessary to protect its rights under the treaty,” State Department spokesperson Tammy Bruce told Reuters.
Trump’s Strong Stance on the Panama Canal
Former President Donald Trump, who has long expressed concerns over Panama’s relationship with China, has threatened to retake control of the Panama Canal if treaty violations are not addressed.
In a post on Truth Social, Trump emphasized the canal’s strategic importance to the U.S. economy and national security, calling it a “VITAL National Asset” and warning that any Chinese encroachment on its operations would not be tolerated.
“The Panama Canal is considered a VITAL National Asset for the United States due to its critical role in America’s economy and national security. A secure Panama Canal is crucial for U.S. commerce and the rapid deployment of the Navy, from the Atlantic to the Pacific, drastically cutting shipping times to U.S. ports. The United States is the Number One user of the Canal, with over 70 percent of all transits heading to or from U.S. ports,” Trump stated.
Trump also accused Panama of imposing unfair tolls on U.S. ships passing through the canal, arguing that the exorbitant fees were a “rip-off” despite the United States’ long history of financial and strategic support to Panama.
“It was likewise not given for Panama to charge the United States, its Navy, and corporations doing business within our country exorbitant prices and rates of passage. Our Navy and Commerce have been treated in a very unfair and injudicious way. The fees being charged by Panama are ridiculous, especially knowing the extraordinary generosity that has been bestowed to Panama by the U.S. This complete ‘rip-off’ of our country will immediately stop,” Trump declared.
The Financial and Strategic Stakes of the Panama Canal
The Panama Canal is one of the most vital chokepoints in international trade, with over 14,000 ships transiting its waters each year, carrying goods between the Pacific and Atlantic Oceans. The United States accounts for more than 70% of all cargo passing through the canal, making it the single most important user of the waterway.
The tolls imposed on ships vary widely, depending on factors such as vessel size and cargo weight, with fees ranging from a few thousand dollars to more than $500,000 per transit. The rising cost of using the canal has led to tensions between Panama and the U.S., with Washington arguing that its ships are being unfairly overcharged.
Given the canal’s role in U.S. military operations and global commerce, any disruption—whether from geopolitical disputes, economic policies, or external influence—poses a serious threat to American interests.
Could Military Action Be on the Table?
While Trump has not explicitly confirmed that military intervention is imminent, his rhetoric suggests that all options remain on the table should Panama fail to address Washington’s concerns over China’s growing influence in the region.
The possibility of U.S. military action would not be unprecedented. In 1989, the U.S. launched Operation Just Cause, a full-scale military intervention in Panama, to remove dictator Manuel Noriega from power. If Washington perceives the current situation as a similar threat to national security, it could escalate tensions significantly.
Given the Biden administration’s current focus on countering China’s influence in global trade and security, it is likely that diplomatic and economic measures will be prioritized before any military action is considered.
China’s Response and Potential Repercussions
Beijing has not yet issued a formal statement regarding Panama’s withdrawal from the Belt and Road Initiative, but it is expected that China will seek alternative means to maintain its influence in Latin America.
China has invested billions of dollars in infrastructure projects across the region, securing long-term economic partnerships. Losing Panama—a strategic hub for global commerce—would be a major setback for China’s global expansion.
However, if other Latin American nations follow Panama’s lead and begin distancing themselves from Beijing, it could mark a turning point in U.S.-China competition for influence in the Western Hemisphere.
Conclusion: A Pivotal Moment in Global Geopolitics
Panama’s decision to distance itself from China’s Belt and Road Initiative represents a major victory for U.S. diplomacy and a potential turning point in Latin America’s geopolitical landscape.
While Panama’s shift is a setback for Beijing, the broader implications remain to be seen. If Washington successfully counters China’s economic foothold in Latin America, it could reshape the balance of power in the region for years to come.
At the same time, Trump’s warnings about potential U.S. action on the Panama Canal add another layer of uncertainty to the situation. The coming months will be critical as Panama, the U.S., and China navigate the diplomatic, economic, and security challenges that arise from this high-stakes geopolitical shift.
One thing is clear: the battle for influence in Latin America is far from over.
