Panama Considers Canceling Port Deal With Hong Kong Firm
Trump Says China Has Too Much Influence Over Panama Canal
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Panama is weighing whether to cancel its contract with the Hong Kong-based company that operates ports near the Panama Canal, according to people with knowledge of the situation, a potential concession to defuse President Donald Trump鈥檚 threats about countering China鈥檚 influence around the key waterway.
The government of President Jose Raul Mulino is weighing the possibility of canceling the contracts held by Hutchison Ports PPC, a subsidiary of conglomerate CK Hutchison Holdings Ltd., according to the people, who asked not to be identified given the commercial and political sensitivity of the issue.
They cautioned that no decision has been made and that the government would proceed in a way intended to avoid lawsuits and follow due process. Panama鈥檚 presidential office didn鈥檛 immediately respond to a request for comment, and Hutchison Ports didn鈥檛 respond to a request for comment.
If such a move goes through, it would mark a major gift to Trump, who says that China has too much control over the canal and hasn鈥檛 ruled out seizing it by force. Hutchison Ports operates two of the five ports adjacent to the Panama Canal, one on each side. China has steadily eroded Hong Kong鈥檚 autonomy in recent years.
U.S. Secretary of State Marco Rubio told Panamanian authorities during a visit Feb. 2 that steps must be taken to curb what he called China鈥檚 鈥渦nacceptable鈥 influence over the U.S.-built canal, which was ceded to Panama in 1999 under a treaty signed two decades earlier by President Jimmy Carter. Hutchison has run the ports in Panama鈥檚 Balboa and Cristobal under a concession that was first signed in 1997 and, in 2021, extended until 2047.
It鈥檚 not the only action concerning the ports. Two attorneys filed suit against the Hutchison contract Feb. 3, alleging it violates the country鈥檚 constitution. One of the attorneys, Norman Castro, said the concession contains excessive tax breaks and cedes large swaths of land to the port company, violating the constitution鈥檚 guarantee of placing the public good over private interests.
During Rubio鈥檚 visit, Panama promised free passage for U.S. warships through the canal and said it will withdraw from China鈥檚 signature lending program, the Belt and Road Initiative.
Rubio has said Beijing could use the ports as a staging point for military operations in case of a conflict.
The Trump administration鈥檚 assessment marks a reversal from previous findings from the State Department. In 1999, a State Department official testified to the Senate Armed Services Committee that the U.S. had concluded that Hutchison鈥檚 operation of the ports 鈥渄oes not represent a threat to canal operations or other U.S. interests in Panama.鈥
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鈥淔or the most part, Hutchison鈥檚 operations are limited to loading and unloading and storing cargo containers,鈥 Ambassador Lino Gutierrez testified at the time. 鈥淭hey are also developing port facilities, with a view toward making Cristobal the hub of their operations in the Pacific Ocean.鈥
About 75% of the cargo transiting through the Panama Canal goes to or from the U.S., making it by far the biggest beneficiary of the route. The canal brought in nearly $5 billion in fiscal 2024, or about 4% of Panama鈥檚 gross domestic product.
