In his first foreign visit as Secretary of State, Marco Rubio is in Panama today on the first leg of a trip that will also take him to El Salvador, Costa Rica, Guatemala, and the Dominican Republic. He met today with Panama’s Foreign Minister Javier Martinez-Acha, as well as President Jose Raul Mulino. As Reuters reports, Rubio and Mulino made progress on certain key items like migration and the management of Chinese business interests in the country, although the bedrock issue of the Panama Canal’s management remains unsolved.
Today’s meeting comes as Donald Trump has raised tensions with American allies around the world, implementing tariffs against Canadian and Mexican goods and threatening the same to EU countries, as well as signaling his intent to annex Greenland, which is a Danish territory. Panama is no exception, as Trump declared in his inaugural address on January 20th that “China is operating the Panama Canal and we didn’t give it to China, we gave it to Panama, and we’re taking it back.” In response, President Mulino said in a post on X that “the canal was not a concession from anyone. It was the result of generational struggles that culminated in 1999.”
The United States completed the construction of the Panama Canal in 1914 and maintained control of it until 1977 when, after years of protest from the Panamanian people and state, Jimmy Carter signed a treaty gradually handing over control to the Central American country. Panama gained full control in 1999 under a treaty stipulating that it remain neutral and open to vessels from all countries. The canal is operated by a state-run agency called the Panama Canal Authority, although a Hong Kong-based company, Hutchison Whampoa, currently operates the two ports on the Pacific and Atlantic ends of the canal and has a 25-year lease that was renewed in 2021.
Mulino appeared to offer a concession regarding this firm’s deal to operate his country’s infrastructure, saying that his government will “study the possibility of terminating it early.” He also said it was “important” to negotiate directly with Trump face-to-face. In summarizing the meeting, the State Department stated that “Secretary Rubio made clear that this status quo is unacceptable and that absent immediate changes, it would require the United States to take measures necessary to protect its rights under the treaty.”
The overall situation pitting Chinese interests against those of the United States is indicative of broader changes in Latin American countries’ economic arrangements since the dawn on the twenty first century. In 2000, the United States was the largest trading partner with nearly every country to its South, from Mexico to Argentina. For the majority of those countries today, it’s China. While Panama imports more goods from the United States than any other country, to the tune of $2.7 billion in 2024, China is by far the country’s largest export partner, as Panama shipped over $1.3 billion worth of goods their way in that same year. The U.S. accounts for a comparatively paltry $148 million in goods exported from Panama.
Under the first Trump administration, trade flows between the U.S. and Latin American countries, excluding Mexico, fell behind China’s, with the gap widening significantly over time. As of 2021, China’s trade with those countries amounted to nearly $250 billion, the result of a continually upward trend, while their trade with the U.S. has fallen from around $213 billion in 2019 to less than $175 billion in 2021. “The most important commercial, economic and technological ties for Latin America are definitely with China, which is the top trade partner for the region,” Juan Carlos Capunay, Peru’s former ambassador to China said in 2022. “Well above the United States.”
