US and Latin American Nations Condemn China’s Economic Retaliation Over Panama Canal Dispute

A coalition of six countries, including the United States, Bolivia, Costa Rica, Guyana, Paraguay, and Trinidad and Tobago, has issued a joint statement backing Panama following a legal ruling that annulled Chinese conglomerate CK Hutchison’s contracts to manage key Panama Canal ports. The statement also criticizes China’s subsequent economic retaliation targeting Panamanian-flagged ships.

This dispute highlights the growing geopolitical tensions surrounding the Panama Canal, a vital global shipping route, and underscores how maritime trade is increasingly becoming a tool in international political conflicts. The situation raises concerns about sovereignty, economic pressure tactics, and the vulnerability of global shipping lanes.

Background: Panama’s Supreme Court Invalidates Chinese Port Contracts

In January 2026, Panama’s Supreme Court declared unconstitutional the decades-old contracts that allowed CK Hutchison, a Hong Kong-based conglomerate, to operate the Balboa and Cristobal port terminals on the Panama Canal. This decision effectively ended CK Hutchison’s administration of these strategic ports, sparking a legal and diplomatic dispute.

China’s Retaliation: Detention of Panamanian-Flagged Ships

Following the court ruling, China responded by detaining nearly 70 Panamanian-flagged ships in March 2026, a figure significantly higher than usual, according to the US Federal Maritime Commission. These actions are widely viewed as targeted economic pressure aimed at Panama, with repercussions extending to US shipping interests due to the substantial volume of US containerized trade carried by Panamanian vessels.

These actions – following the decision of Panama’s independent Supreme Court regarding the Balboa and Cristobal terminals – are a blatant attempt to politicise maritime trade and infringe on the sovereignty of the nations of our hemisphere.—Joint statement by Bolivia, Costa Rica, Guyana, Paraguay, Trinidad and Tobago, and the United States

We stand in solidarity with Panama. Any attempts to undermine Panama’s sovereignty are a threat to us all.—US Secretary of State Marco Rubio

Broader Implications: Shipping as a Political Pawn

The Panama Canal dispute is part of a larger pattern where maritime trade routes and shipping companies become entangled in geopolitical conflicts. US officials have also reported China’s pressure on shipping giants Maersk and Mediterranean Shipping Company, whose subsidiaries took over port operations after CK Hutchison’s removal. Chinese shipping giant COSCO has suspended operations at the Balboa terminal, further escalating tensions.

States know how vulnerable shipping is. They know they can cut shipping lanes off if necessary. It should not surprise us from now on if ships and shipping in general become pawns in international politics.—David Smith, Associate Professor, University of Sydney’s US Studies Centre

Looking Ahead: Legal Battles and Geopolitical Stakes

CK Hutchison is pursuing international arbitration against Panama, seeking over $2 billion in damages. Meanwhile, the US and Latin American countries continue to support Panama’s sovereignty and call for the depoliticization of maritime trade. The dispute underscores the strategic importance of the Panama Canal and the complex interplay between legal rulings, economic interests, and international diplomacy.