US-China Rivalry Heats Up Over Panama Canal
Beijing’s grip on the Panama Canal is tightening— Secretary of State Marco Rubio’s visit is no coincidence.
Marco Rubio’s visit to Panama marks his first foreign trip since assuming the role of Secretary of State, underscoring the growing strategic weight Washington assigns to the Central American nation.
In 2023, the Panama Canal saw about 11,240 transits, transporting around 210 million long tons of cargo. While this volume might seem modest compared to other global trade routes, its strategic importance is undeniable because it serves as a critical shortcut for transoceanic shipping, particularly for U.S. trade with Asia.
The United States was the largest user, with nearly 75% of the cargo originating from there, while China contributed about 21%, highlighting the canal's pivotal role in facilitating efficient and cost-effective trade.
Following Trump’s comments, Panamanian President José Raúl Mulino did not directly address the ultimatum over the canal.
However, in a Sunday press conference, he announced that his government would not renew a 2017 Belt and Road Initiative agreement with China, which had been signed by a previous administration.
While the Panama Canal remains under the sovereign control of the Panamanian government, its neutrality is enshrined in a longstanding treaty with the United States.
The handover process, initiated in 1979 through a U.S.-Panama treaty, culminated in Panama assuming full control of the canal by the end of 1999. Despite this, China’s economic footprint near the waterway has expanded.
Beijing-linked firms operate key infrastructure at both ends of the canal, with a Hong Kong-based company running two of the five major ports near its entrances.
From a geopolitical perspective, these investments grant China leverage over a global chokepoint. Should tensions escalate—whether in a trade war or military confrontation—Chinese-controlled ports could serve as de facto pressure points against U.S. maritime access. This possibility is particularly relevant given the U.S. Senate’s interpretation of the canal's neutrality regime.
The legal framework governing the canal’s operations stems from two treaties signed in 1977 by President Jimmy Carter and Panamanian leader Omar Torrijos.
The first treaty set the terms for the gradual transfer of canal authority to Panama, while the second established a "regime of neutrality," ensuring that all nations retain equal access to transit, tolls remain fair, and Panama exclusively operates the waterway. Crucially, the treaty also prohibits foreign military forces from establishing a presence in Panama.
Yet neutrality, as history shows, is often a matter of interpretation. In their joint statement, Carter and Torrijos affirmed that the United States could "defend the Canal against any threat to the regime of neutrality." The treaty does not self-enforce; each signatory retains the right to determine when a violation has occurred.
The Senate further clarified that Washington could take "unilateral action" in response to threats, though military force would be limited to restoring neutrality—not reasserting permanent U.S. control over the canal zone.
Beijing's growing presence in Panama through the Belt and Road Initiative adds another layer of complexity. While Panama remains an official signatory to the initiative, Mulino’s decision to distance his administration from Chinese infrastructure agreements signals a potential shift.
Whether this move is a symbolic gesture or a meaningful recalibration of Panama’s foreign policy remains to be seen. For Washington, however, the objective is clear: preserve unfettered access to a strategic maritime corridor.