Isthmus Acquisitions

Panama bulletin

Earlier this year, we analyzed the geopolitical and economic developments stemming from the Trump Administration’s tariff policies and foreign strategy, suggesting that while these may initially seem divisive, they may inadvertently push toward deeper integration into a North American Union. With Chinese influence in Panama increasing through infrastructure investments, U.S. Secretary of State Marco Rubio toured Central America, pressuring Panama to reduce Chinese ties, especially around the Panama Canal, with Panama withdrawing from China’s Belt and Road Initiative (BRI). Though China urged Panama to resist U.S. pressure, the regional imbalance of power suggested that the U.S. will likely maintain influence.

The next month, that seemed even more likely, with President Trump celebrating a U.S.-led consortium, spearheaded by BlackRock, acquiring most of CK Hutchison’s $22.8 billion global ports business (held under the subsidiary Hutchinson Port Holdings), including key ports at both ends of the Panama Canal, with U.S. investors set to control 90% of Panama Ports Company, which operates the Balboa and Cristobal ports. Trump framed the deal as part of “reclaiming” the canal from Chinese control—though CK Hutchison is a Hong Kong firm not financially tied to China’s government—while Panama’s leadership pushed back against Trump’s rhetoric, with Panamanian President José Raúl Mulino strongly denying any U.S. takeover and reiterating Panama’s full sovereignty over the transoceanic corridor. Nonetheless, the ports’ strategic location is vital to the U.S., as most ships using the canal are U.S.-bound—and the sale might further strain U.S.-Panama relations, especially given Trump’s controversial statements and the canal’s sensitive historical context.

Product of stable diffusion (“"The Corporatarchs", technocratic oligarchs seated on the executive board, negotiate the sale of a geographical engineering project that splintered formerly lush jungles”)

CK Hutchinson had expected to finalize the planned transition by 2 April. But on 28 March, China’s antitrust regulator, the State Administration for Market Regulation (SAMR), announced it will review CK Hutchison’s $22.8 billion sale of its global ports business—including the two strategic ports on the Panama Canal—to the U.S.-led consortium featuring BlackRock. The move raises uncertainty around the deal, which had already drawn criticism from Chinese state media, which called it a betrayal of Chinese interests.

While the Panama ports represent a small portion of the overall deal, SAMR is assessing whether the sale could undermine competition in China’s domestic and international shipping sectors. Experts consulted by the regulator suggested that conditions may be imposed to protect Chinese shipping competitiveness. Simultaneously, Panama’s auditor-general is conducting an audit of CK Hutchison’s compliance with the port concession terms, further complicating the transaction. Analysts warn that if China blocks the deal, it could rattle global financial markets and damage Hong Kong’s standing as a financial hub.

Of course, China isn’t the only nation with regulators complicating the deal: just last week, Panama’s Comptroller-General Anel Flores announced that CK Hutchison violated the terms of its concession. An audit found “many breaches,” including $1.2 billion in unpaid fees, misuse of tax exemptions, and previous irregularities. Flores said he would file a legal complaint over the violations. Some analysts suspect that the audit findings had been politically timed to justify Panama canceling its concession to CK Hutchinson, thereby appeasing the Trump Administration: the report was released just before U.S. Defense Secretary Pete Hegseth’s visit to Panama, though Flores denied any connection.

But in the context of Trump’s desire to reestablish American influence over the Panama Canal, the U.S. isn’t waiting around: as Stavroula Pabst reports, Hegseth’s visit coincided with the announcement that it would deploy U.S. troops near the Panama Canal for military training and other activities under a new agreement with the Panamanian government, with the move appearing to represent a political concession over the fees charged to U.S. ships transiting the canal. While Trump allies previously floated the idea of reestablishing U.S. military bases in Panama, the agreement stipulates that troops will operate from Panama-controlled facilities—some of which are old American-built sites—while the Panamanian government has emphasized it will not permit foreign military bases.

The deployment comes amid mixed signals on U.S. recognition of Panamanian sovereignty. Although a Spanish-language joint statement affirms Panama’s control over the canal, the English version omits this, and U.S. officials have offered vague responses on the issue, instead focusing on countering “malign influence,” particularly from China. While the U.S. ceded control of the canal to Panama in 1999, this announced deployment suggests a resurgence of American “gunboat diplomacy” amid increasing U.S.-China tensions.

In response, Panamanian opposition leaders have accused the U.S. of carrying out a “camouflaged invasion” following the U.S. troop deployment. Naturally the deployment has sparked domestic outrage, with critics arguing it violates Panama’s sovereignty and the canal's neutrality treaty, which prohibits foreign military installations. Despite government claims that the new U.S.-Panama agreement is temporary and does not establish military bases, opposition figures argue that the arrangements effectively constitute foreign military bases and recall painful memories of “Operation Just Cause,” the 1989 U.S. invasion.

Adding to the controversy, the U.S. also secured a deal to reimburse its navy ships for canal fees, which may further violate neutrality terms and create pressure for additional concessions. President Mulino faces mounting domestic criticism for his lack of transparency and for handling negotiations unilaterally, with two-thirds of Panamanians disapproving of his leadership amid broader political discontent and anticipated protests against both the U.S. presence and domestic policies. Popular demonstrations began at the start of Hegseth’s visit, with more expected to follow.

Taken all together, these developments point to a reassertion of U.S. power in the Western Hemisphere, with the Panama Canal once again becoming a flashpoint in the broader contest between Washington and Beijing. The BlackRock-led attempted acquisition of CK Hutchison’s ports, the audit-driven legal pressure in Panama, and the strategic return of U.S. troops to canal-adjacent facilities all reflect a coordinated effort to limit Chinese influence and reinforce American dominance over a historically vital trade artery. Yet the implications extend far beyond maritime logistics—testing Panama’s sovereignty, stirring regional anxieties, and redefining the limits of global economic integration under rising great power rivalry. As geopolitical alignments shift and legal battles unfold, it seems certain that the Panama Canal’s symbolic and strategic importance will ensure that it remains a fulcrum of international politics for the foreseeable future.