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Panama has decided not to renew its agreement with China’s Belt and Road Initiative (BRI) and is shifting closer to the United States.
The announcement came after a meeting in Panama City between Panamanian President José Raúl Mulino and U.S. Secretary of State Marco Rubio, where they discussed concerns about China’s influence in the region.
Mulino confirmed on Sunday that Panama would not renew the memorandum of understanding with China when it comes up for renewal in the next one or two years. Speaking to reporters, he indicated his government is also exploring whether the agreement can be terminated ahead of schedule.
“We are going to study the possibility of whether it can be finished earlier or not. I think it is due for renewal in one or two years,” Mulino said.
The announcement marks a significant departure from the policy set in 2017 by then-President Juan Carlos Varela, who aligned Panama with China’s global infrastructure strategy after severing diplomatic ties with Taiwan.
Since then, the U.S. has repeatedly voiced concerns that China’s economic projects in Latin America serve as tools for political leverage, trapping nations in unsustainable debt and giving Beijing control over strategic assets, including major infrastructure like ports and power grids.
During his visit, Rubio emphasized the urgency of addressing Chinese influence in the region, particularly over the Panama Canal.
The Trump administration had previously accused Panama of failing to uphold the neutrality of the U.S.-built canal, as outlined in the 1977 Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal. While Mulino reassured that the treaty remains valid and that the canal operates as an autonomous entity, Rubio made clear that the U.S. considers the status quo unacceptable.
“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 posted on X.
Trump has repeatedly raised concerns over China’s involvement in the canal, accusing Beijing of exerting control and imposing costly tolls on American vessels. House Republicans have even introduced a bill—the Panama Canal Repurchase Act—aiming to authorize negotiations for the U.S. to reacquire the canal.
The bill, sponsored by Rep. Dusty Johnson (R-SD), underscores Washington’s growing concern over Beijing’s presence in the hemisphere.
“President Trump is right to consider repurchasing the Panama Canal,” Johnson stated. “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.”
Currently, 72% of all vessels that transit the canal are either coming from or heading to a U.S. port, highlighting the waterway’s strategic importance. The canal also serves as a key route for U.S. military and Coast Guard operations, reducing travel distances by nearly 8,000 miles compared to alternate routes around South America.
In addition to discussions on the canal and Chinese influence, Mulino and Rubio addressed broader regional concerns, including illegal immigration and economic cooperation. Panama committed to strengthening its July 2024 memorandum of understanding with the U.S. Department of Homeland Security to assist with migration enforcement efforts.
Rubio’s trip to Panama is part of a broader diplomatic push through Latin America, including stops in El Salvador, Costa Rica, Guatemala, and the Dominican Republic. His visit marks the first time in a century that a U.S. secretary of state has chosen Latin America as their first official international destination, underscoring the Trump administration’s renewed focus on countering China’s influence in the Western Hemisphere.
Several U.S. officials praised Mulino’s decision to break with China. National Security Adviser Mike Waltz described it as a “step in the right direction,” while Rep. Bill Huizenga (R-MI) credited Rubio’s leadership in countering China’s regional encroachment.
“China has seen much too much influence here in the Western Hemisphere,” Huizenga stated. “Now on to Africa and other spots around the world.”
For Washington, Panama’s pivot away from China represents a victory in its effort to push back against Beijing’s growing economic and political clout. Whether the U.S. will go further and move to reclaim control over the Panama Canal remains to be seen, but the shift in Panama’s policy signals a realignment that favors American interests in the region.