Panama’s careful course through the canal crisis sparked by Trump

President Trump escalated tensions with Panama to unprecedented levels on Sunday, threatening to “recover the Panama Canal” even as Secretary of State Marco Rubio conducted delicate negotiations in Panama City.

“Something very powerful is going to happen,” Trump warned from Washington, casting a shadow over Rubio’s diplomatic mission and pushing hemispheric relations to their most precarious point since the 1989 U.S. invasion of Panama.

“The canal is not for China,” Trump declared to U.S. media, asserting that Panama had “violated the agreement” and making the extraordinary claim that 70 percent of canal signage appears in Chinese. His declaration that “China is running the Panama Canal” and that Panama’s actions threaten “the financial security of this part of the world” ignited immediate diplomatic tremors.

Trump subsequently announced plans for a direct phone conversation with Panamanian President José Raúl Mulino on Friday, and, while acknowledging Rubio’s “very good” meeting, expressed dissatisfaction with Panama’s commitments. “Essentially, they’ve committed to certain things, but I’m not happy with it,” Trump stated.

Mulino performed with calculated precision, balancing concession with sovereignty. Following what he described as a “highly respectful and cordial” meeting with Rubio, Mulino revealed his administration’s most significant shift: Panama would not renew its 2017 Belt and Road Initiative memorandum with China. Going further, Mulino indicated openness to terminating the agreement before its expiration date, stating, “We’ll study the possibility of terminating it early.” This agreement, previously extended in 2020 and 2023, had established expansive cooperation in infrastructure, trade, technology and cultural exchange.

Addressing Trump’s accusations directly, Mulino unveiled unprecedented oversight measures. For the first time since its 1997 concession, Panama has launched comprehensive audits of both ports operated by Hong Kong-based Hutchison. These facilities, strategic anchors at each end of the canal, have long symbolized China’s commercial presence in the region.

“The canal grew in Panamanian hands,” Mulino asserted, highlighting the $5 billion expansion as evidence of successful local management. He carefully delineated constitutional boundaries, explaining that presidential authority stops at the canal’s autonomous administration — a subtle reminder of established legal frameworks governing the waterway.

The diplomatic choreography extended beyond canal operations. Mulino offered the Nicanor airstrip in Darién for expanded migrant repatriation efforts, acknowledging emerging security challenges. This commitment materialized dramatically the next morning, as Rubio stood at Albrook International Airport watching a deportation flight carrying 43 undocumented Colombians — 32 men and 11 women, including seven with criminal records — returning to their homeland. The flight exemplified the success of a $2.7 million U.S.-funded initiative launched with Mulino’s administration in July 2024, which has facilitated over 40 charter flights, returning more than 1,700 migrants across 14 countries.

“This is an effective way to stem the flow of illegal migration, of mass migration, which is destructive and destabilizing,” Rubio told reporters at Albrook, highlighting Panama’s reported 90 percent decrease in Darién region crossings compared to the previous year.

Rubio’s mission walked a diplomatic tightrope. The secretary delivered Trump’s “preliminary determination“ that Chinese Communist Party influence threatens the waterway and violates the Neutrality Treaty. Yet discussions yielded practical cooperation frameworks, suggesting paths toward resolution.

By afternoon, the Panama Canal Authority extended a significant gesture, committing to optimize priority transit for U.S. Navy vessels. This technical accommodation demonstrated Panama’s willingness to address American concerns while maintaining operational independence.

Mulino’s assessment of U.S. engagement proved particularly pointed. He urged Washington to increase investment in Panama, noting America had “left many chairs empty over these years,” including a crucial four-year ambassador vacancy. This diplomatic void, he suggested, created space for other nations’ influence.

“The canal fuses with Panamanians, Panamanians with the Canal, as a single entity,” Mulino explained, articulating both national pride and pragmatic cooperation. His emphasis on waiting for “technical instances of the canal to clarify the president’s concerns about Chinese presence” demonstrated Panama’s commitment to proper diplomatic channels.

The afternoon brought another significant development as Rubio toured the Miraflores Locks, engaging directly with canal operations. The Canal Authority’s technical briefings emphasized operational excellence and strict neutrality protocols, subtly countering Trump’s claims about Chinese influence. Senior canal officials presented detailed statistics about vessel transit patterns, workforce composition and security measures — data that appeared to challenge several of Trump’s assertions about Chinese control.

Beyond the immediate crisis, the confrontation raises fundamental questions about the nature of sovereignty in an age of global infrastructure. The Panama Canal, while operated under Panamanian authority, serves as a crucial artery for global commerce. This reality creates an inherent tension between national sovereignty and international interests, a dynamic that Panama has skillfully managed for decades — until this current challenge to its stewardship.

As night fell on this consequential Sunday, the contrast between Trump’s confrontational rhetoric and the measured tone of direct diplomatic engagement highlighted the complexities of modern international relations. The coming days, particularly Friday’s call between Trump and Mulino, will likely determine whether careful diplomacy can bridge the gap between presidential demands and Panama’s sovereign rights, with implications that will resonate throughout the hemisphere.

Nivia Rossana Castrellón is the former deputy minister of foreign affairs of the Republic of Panama.

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