Trump Sends Rubio To Curb China’s Influence In Panama

We have been following Trump's threatening tone in expressing his dissatisfaction with the Panama Canal for a while now. I have previously written about Trump's stance on gaining leverage in bargaining on the Panama Canal. Now, the bargaining phase has begun in the Panama Canal debate.

U.S. Secretary of State Marco Rubio visited Panama on February 2, 2025, and conveyed his demands regarding the Panama Canal directly to Panamanian President Jose Raul Mulino. Rubio renewed his veiled threat by saying that "necessary measures will be taken" if Chinese influence on the Panama Canal is not ended.

Although Rubio did not clarify what he meant by "necessary measures," and Trump has maintained a harsh tone toward Panama, the President of the United States made it clear that he does not believe military intervention is necessary. Trump reiterated that Panama would not meet the terms unless control of the Panama Canal was returned to the United States. However, what the transfer of the Panama Canal to the U.S. means remains unclear.

Rubio's diplomatic mission in the region is part of the U.S.' efforts to strengthen its influence over Latin America. Even for those who do not follow U.S. politics closely, it is striking that Rubio is one of the Trump administration's most important Latin American representatives. It is an interesting transformation that Rubio, who Trump mocked by calling him "Little Marco" during the 2016 Republican primaries, is now leading the most critical talks in the region.

However, his meeting with Panamanian President Jose Raul Mulino is more than a symbolic visit; it directly concerns the power struggle over one of the most strategic points of global trade. Washington is increasing pressure to limit Chinese influence over the Panama Canal, and this meeting is seen as part of this effort.

Panama ends Belt and Road ties, audits Chinese-run ports, and aids U.S. deportations but insists on Canal neutrality and full control over its operations

THE MAIN ISSUE: CHINA’S ECONOMIC INFLUENCE OVER PANAMA 

The Rubio-Mulino meeting focused on China’s growing economic influence in Panama, particularly its presence in port operations at the entrances to the Panama Canal. Trump claims this violates the 1977 U.S.-Panama treaty and is a national security threat. However, this is a political claim rather than a legal one.

Despite Trump’s rhetoric, the likelihood of the U.S. intervening militarily in Panama is extremely low. As I have noted before, the idea of ​​the U.S. unilaterally regaining control of the Canal is more rhetorical. After the meeting, Mulino also allayed these concerns by stating that “there is no real threat of seizing the canal or using force.”

U.S. CLAIMS REGARDING PANAMA’S NEUTRALITY AND PANAMA’S RESPONSE

The U.S. claims that Panama violates the Canal’s neutrality and that economic agreements with China contradict the 1977 Panama Canal Neutrality Treaty. Washington sees the involvement of Chinese companies in strategic infrastructure projects around the Canal and the expansion of China’s economic influence in Panama through the Belt and Road Initiative as threats. U.S. officials argue that China’s increasing influence over the Panama Canal could make global trade routes more vulnerable to geopolitical conflicts and undermine U.S. strategic interests in the long run.

One of the biggest concerns in the U.S., in particular, is that Hong Kong-based CK Hutchison Holdings operates ports at both entrances to the Canal. U.S. officials claim that Beijing can indirectly have a say in the Canal’s management through logistics and commercial operations, undermining the neutrality principle.

On the other hand, Panama argued that CK Hutchison Holdings’ port operations are limited to commercial activities and have no influence over the Canal’s management. President Mulino stressed that the Canal is entirely under Panama’s control and that no foreign company, even if it operates a port, can influence its operation or neutral status.

WHAT DID THE U.S. GAIN?

Although the meeting did not create a major change in Panama's geopolitical stance, it did provide a symbolic gain for Trump. Mulino announced that Panama would not renew the Memorandum of Understanding with China, which covers the Belt and Road Initiative. He even added that a way to exit the agreement earlier would be explored. This step indicates that Panama will reduce its relations with China under pressure from the U.S.

Mulino also stated that Panamanian authorities are auditing the Hong Kong company that operates two ports around the Canal. He emphasized that they should wait for the audit to be completed to reach legal conclusions and take action accordingly, indicating that they are responding to U.S. concerns.

Another interesting detail of the Rubio-Muloni meeting is Panama's announcement that it will assist the U.S. with its illegal immigration issue. Mulino stated that Panamanian authorities have met with Rubio on the expansion of the immigrant return flight program, which aims to deport foreigners who do not have the right to remain in the country legally. However, he emphasized that the U.S. should cover the cost of this process.

When asked if the migrants would be brought to Panama and then sent back to their home countries, he said, "Yes. Absolutely… We can do that, without any problems, at a cost that the U.S. will fully cover. Panama will not invest a single dollar in this."

The program, signed in July 2024, aims to reduce irregular migration through the mountainous, rainforest-covered Darien Gap that connects South and Central America. This difficult 106-kilometer migration route from Colombia to Panama is a critical transit point for migrants seeking to reach the U.S. and Canada. Mulino said that migrants from Venezuela, Colombia, Ecuador, and other countries could also be deported through this program.

Trump's aggressive rhetoric on the Panama Canal is consistent with his negotiating strategy. He likes to press by making big statements, and we can predict that he will continue to bring up the Panama Canal when it suits his interests.

Preserving the Canal's neutrality and Panama's sovereignty over the Canal remains a top priority for Panama. Muloni may cancel or reshape some of Panama's agreements with China in accordance with the U.S. demands. However, Panama wouldn't completely end its economic ties with China.

The U.S.-China rivalry shapes Panama’s future as it cuts ties with China and strengthens U.S. relations. The Canal remains vital, and Panama continues as a key hub for stability and expat opportunities

CONCLUSION

The Rubio-Mulino meeting should be seen as a reflection of the growing U.S.-China rivalry in Latin America as Panama finds a way to balance its economic pragmatism with political pressure from its historical ally, the U.S.

Panama is expected to meet the U.S.’ demands by significantly reducing its economic relations with China shortly. In addition, Panama's statement that it is open to further cooperation with the U.S. on the issue of migrants means that relations between the U.S. and the Panamanian administration will become closer.

The Canal will continue functioning as it always has under Panamanian sovereignty—a marvel of man-made engineering, a vital global trade artery, and one of the highlights of any trip to Panama.

Panama has become a home to me. Offering great opportunities for expats, Panama will continue to be a cornerstone of political and economic stability in South America. If you are considering building a Plan-B in Panama or somewhere else, you can take the first steps by getting your free special report on ‘Plan-B residencies & Instant Citizenships.’