UPDATED: Trump Admin. Lays Down the Law Over Panama Canal, Sets Up Major Confrontation; Panama Folds

Secretary of State Marco Rubio met with Panamian President José Raúl Mulino on Sunday and laid down the law regarding the Panama Canal. 

President Donald Trump has repeatedly expressed his intention to end Chinese influence over the key shipping channel, noting that American ships are being charged higher fees than other nations. A Hong Kong-based company currently holds the contract to control the canal, and there’s little doubt that CCP politics are playing a role in how things are operated. China is always going to try to press any advantage it can, and this situation is no exception. 

SEE: Does China Run the Canal?

The U.S. State Department released the following statement after Rubio concluded his meeting in Panama.

Secretary Rubio informed President Mulino and Minister Martínez-Acha that President Trump has made a preliminary determination that the current position of influence and control of the Chinese Communist Party over the Panama Canal area is a threat to the canal and represents a violation of the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal. 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.

One of the issues here is that the Panama Canal Treaty of 1977, which was created and signed by an incredibly naive (at best) President Jimmy Carter, calls for total neutrality regarding the canal. Handing China control of operations is not neutrality. It’s a slap in the face to the United States and its generosity. China did not spend billions of dollars to build the canal, and because it is a geopolitical adversary, it is a national security risk for the communist country to have any involvement outside of paying fees to transit its ships. 

It’s likely tariffs will be the first shoe to drop if Panama doesn’t acquiesce to the White House’s demands. For context, Panama imports over $12 billion a year in U.S. products and services, including lots of oil. By comparison, the United States imports less than one billion dollars in Panamanian products. In other words, Panama should probably be doing everything it can to avoid a trade war given it has far more to lose. 

This situation has an easy solution. All the Panamanian government has to do is end its contracts with Chinese companies and restore neutrality to the canal. Further, American ships should be paying less than any other nation given our investments. If those things happen, Panama can avoid a costly trade war or worse, and I wouldn’t test Trump on the “or worse” part of that equation. Treaties are only worth something if they are enforced.

UPDATE [5:45 p.m. EST]: It looks like Panama has folded its hand, via a report from Matthew Foldi at the Washington Reporter.

Watch:

Panama’s President: Panama will not renew the memo 2017 with China on its Belt and Road Initiative. Panama will study the ability to end the agreement earlier than its end date in a year or two.

This comes after SecState Rubio’s visit to Panama today. https://t.co/a1Su4baxTj

— Alex Ward (@alexbward) February 2, 2025

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