Panama’s president, José Raúl Mulino, said on Friday that the crisis with the United States is over, after Donald Trump threatened in 2025 to take back the interoceanic canal because it was supposedly controlled by China. Since taking office a year ago, Trump launched a diplomatic pressure campaign against Panama, arguing that Beijing controls the maritime route through the Hong Kong company Hutchison Holdings, which operates two ports under concession, one on the Pacific and one on the Atlantic.
The Republican’s threat, repeated several times during 2025, caused alarm in Panama, a Washington ally, which even demanded unsuccessfully that its ships be allowed to transit the canal for free, even though bilateral treaties prohibit that. “Panama moved toward a relationship of respect, restored trust, joint work, and friendship, and the canal remained Panamanian, as it will indeed continue to be,” Mulino said in his traditional New Year’s address to the National Assembly.
The president said that “with steady resolve and time” and diplomatic work, the bilateral relationship was repaired and that Panama is now “actively” cooperating with the United States “in the fight against international crime.” “Gone are the dire forecasts and the bombastic, short-sighted declarations,” he said, referring to his critics.
The United States built and inaugurated the canal in 1914, but handed it over to Panama on December 31, 1999, under bilateral treaties. Those agreements establish that all ships, regardless of their country, will pay tolls based on the vessel’s capacity and the type of cargo.
Amid Trump’s threats, Washington and Panama signed controversial security agreements that allow U.S. troops to conduct combat exercises for three years on Panamanian territory. In the midst of the crisis with Venezuela, the U.S. military has carried out three drills with Panama’s police, and new exercises are already scheduled for this year.
In addition, Hutchison Holdings agreed to sell the port terminals in the canal to a conglomerate led by the U.S. firm BlackRock, although the sale has not yet been finalized. The concession contract for the ports to the Hong Kong company, which has been challenged in court, has been criticized by senior Panamanian officials.
