Under mounting pressure from the United States, Panama has announced it will end a critical development deal with China, marking a significant shift in its foreign policy. The decision came after U.S. Secretary of State Marco Rubio’s visit and growing complaints from former President Donald Trump about China’s influence over the Panama Canal.

U.S. Influence Pushes Panama to Cut Ties with China

Panama’s President José Raúl Mulino confirmed that his government will not renew the 2017 memorandum of understanding with China’s Belt and Road Initiative, signaling a retreat from Beijing’s expanding economic presence in the region. This reversal follows strong U.S. warnings about China’s involvement in the canal and the broader geopolitical implications.

“This visit opens the door to build new relations … and try to increase as much as possible U.S. investments in Panama,” Mulino stated, making it clear that the shift was not entirely voluntary but a response to rising pressure from Washington.

With 72% of all vessels passing through the canal linked to U.S. trade, Washington has made it clear that it will not tolerate what it sees as China’s growing control over a waterway vital to American interests.

Rubio’s Stern Warning: No More Chinese Influence

During his visit, Rubio made it clear that the U.S. would not allow further Chinese control over the canal. His message echoed Trump’s long-standing concerns that China has manipulated canal fees and exerted undue influence in Panama.

“The United States cannot, and will not, allow the Chinese Communist Party to continue with its effective and growing control over the Panama Canal area,” Rubio declared in a post on social media. His remarks signaled that Panama had little choice but to realign with the U.S.

Push for U.S. Repurchase of the Panama Canal

The Panama Canal Repurchase Act, introduced by House Republicans, would authorize negotiations for the U.S. to reacquire the canal, further tightening America’s grip on the strategic waterway. Rep. Dusty Johnson (R-S.D.) emphasized the urgency of the move, saying, “China’s interest in and presence around the canal is a cause for concern. America must project strength abroad – owning and operating the Panama Canal might be an important step toward a stronger America and a more secure globe.”

Strategic and Economic Consequences

The Panama Canal remains a lifeline for global trade, and losing Chinese influence there marks a major setback for Beijing’s expansion in Latin America. However, Panama’s decision raises questions about its sovereignty—was this a strategic realignment or a forced concession under U.S. economic and political pressure?

As Washington flexes its muscle, the long-term consequences of Panama’s decision remain uncertain. What is clear, however, is that when it comes to the Panama Canal, the U.S. still calls the shots.