U.S. and regional allies back Panama amid China shipping pressure

Panama sits at the center of a maritime route that shapes U.S. supply chains, hemispheric influence and the balance of power in Latin America. That is why Washington and five regional governments moved together on April 28 to defend Panama’s sovereignty as Beijing’s pressure on Panama-flagged vessels sharpened into a wider contest over the canal and its port terminals.

The United States, Bolivia, Costa Rica, Guyana, Paraguay and Trinidad and Tobago said they were watching what they called China’s targeted economic pressure and recent actions affecting ships sailing under the Panamanian flag. The State Department said the governments were “standing together in our shared mission to secure our hemisphere” and called Panama “a pillar of our maritime trading system.” The statement framed China’s conduct as an attempt to politicize maritime trade and interfere with sovereignty in the hemisphere.

The diplomatic push followed Panama’s Supreme Court decision to invalidate the legal framework behind the Balboa and Cristobal terminal concession held by Panama Ports Company, a CK Hutchison subsidiary, on the Pacific and Atlantic sides of the canal. The court’s ruling, issued Jan. 30 and published in the Official Gazette on Feb. 23, also voided the June 2021 extension that would have kept the deal in place until 2047. That concession had been in place since 1997 and had become one of the most consequential commercial arrangements in the canal zone.

Panama then took temporary control of both terminals and said operations would continue until new tenders were completed. The government named APM Terminals Panama, a Maersk unit, at Balboa and Terminal Investment Limited at Cristobal under 18-month agreements. Together, the two terminals handled about 3.88 million TEUs in 2025, roughly 39% of Panama’s container throughput, making the transition a matter of commercial continuity as much as sovereignty.

The friction widened beyond Panama’s ports. On March 26, Federal Maritime Commission Chair Laura DiBella said China’s detentions of Panama-flagged vessels were “far exceeding historical norms” and appeared intended to punish Panama after the transfer of Hutchison’s port assets. CK Hutchison has rejected the ruling and, by late March, had expanded its arbitration claim against Panama to more than $2 billion. The dispute also complicated the company’s planned $23 billion sale of a majority stake in its global ports business.

China’s Ministry of Transport summoned Maersk and MSC in March for discussions on international shipping operations, adding another layer to a fight that now reaches from courtrooms in Panama to the policy circles of Beijing. For Washington and its regional partners, the message was clear: control of the canal’s logistics is not just a Panamanian issue, but a test of whether the hemisphere can resist economic coercion at one of the world’s most strategic maritime chokepoints.