The Panama Canal, one of the world’s most strategic waterways is becoming a battleground for superpower rivalry. As Washington and Beijing engage in an increasingly fierce geopolitical tug-of-war, Panama finds itself caught in the middle.
In recent weeks, accusations have flown thick and fast. US President Donald Trump declared that “China controls the Panama Canal,” a claim that has sparked anger in Panama and concern across Latin America. China, for its part, has categorically denied the allegations, calling them part of a “disinformation campaign” by the United States.
“We Built It, But They Run It”, Trump’s Canal Takeover Talk
Trump’s remarks have added fuel to an already volatile situation. In March, during a campaign event, he told supporters:
“We gave it away, and now China controls the Panama Canal. That’s one of the most strategic locations in the world, and they run it. We should take it back.”
His words stirred up old wounds and fears that the U.S. may be looking to assert control once again over a canal it handed back to Panama in 1999 under the Torrijos-Carter Treaties.
These comments weren’t dismissed as political bluster by all. In Panama and other parts of Latin America, many saw it as a veiled threat, particularly coming from a U.S. president who returned to power.
BlackRock, Ports, and Shadows of Influence
While the U.S. has not formally accused China of controlling the canal, it has raised concerns over Beijing’s commercial presence in the country. Chief among them is Chinese conglomerate CK Hutchison, which operates ports at both entrances of the canal, Balboa on the Pacific side and Colón on the Atlantic.
In March, U.S. investment behemoth BlackRock struck a $22.8 billion deal to acquire 43 ports globally from CK Hutchison, including the two in Panama. The deal raised eyebrows in both Washington and Beijing, as it shifts control of these key terminals from a Hong Kong-based firm – long alleged to be under China’s sway – to a U.S.-linked financial giant.
The Panamanian government responded by announcing an audit into the original 25-year lease signed with Hutchison, citing “irregularities,” although the sale to BlackRock appears to be proceeding.
Panama’s Balancing Act And Walking the Diplomatic Tightrope
Panama’s government, under President Laurentino Cortizo and now President-elect José Raúl Mulino, has attempted to walk a delicate line. In December, Panama formally withdrew from China’s Belt and Road Initiative, a move that was seen in Washington as a win.
But Panama is also eager not to be perceived as choosing sides. During a joint visit in March by Republican Congressman Pete Hegseth and Senator Marco Rubio, tensions surfaced when U.S. officials claimed Panama had agreed to waive tolls for U.S. Navy ships. Mulino denied any such deal had been struck.
Panama’s Minister for Canal Affairs, José Ramón Icaza, later said that toll concessions would only be possible in exchange for full U.S. recognition of Panama’s sovereignty over the canal. However, this crucial clause was mysteriously missing from the English-language version of his statement, adding to the diplomatic confusion.
China Responds, “We Are Not the Villain Here”
China has pushed back strongly against Trump’s comments and U.S. insinuations. The Chinese Foreign Ministry said:
“The remarks are baseless and part of a broader U.S. attempt to smear China’s cooperation with Latin America.”
Indeed, many in Latin America view the U.S. posture as hypocritical. After years of neglect, Washington is now suddenly alarmed by China’s presence in the region, despite China being a top trading partner and infrastructure investor across much of Central and South America.
In a direct rebuke, Congressman Pete Hegseth said:
“China did not build the canal, does not own the canal, and should not weaponize the canal.”
A Strategic Chokepoint and a Sovereignty Struggle
The Panama Canal is more than a shipping lane – roughly 5% of global trade passes through its locks, and any disruption could have major ripple effects on supply chains and military logistics.
For Panama, the fear is twofold: first, that the canal will become militarized under external pressure; and second, that it will lose its hard-won sovereignty. President-elect Mulino has tried to assert that “Panama will not allow itself to become a battlefield for global powers,” but with U.S. warships increasing their regional presence and Chinese economic interests deeply entrenched, that neutrality may be hard to maintain.
A New Cold War in the Tropics?
While there are no Chinese warships stationed in the canal, and no evidence of direct Chinese control over the waterway, the perception battle has already begun.
