U.S. and Latin America challenge China over Panama Canal control in Port News 07/05/2026 The United States on the 28th of last month (local time) released a joint statement with five Latin American countries squarely targeting China. What they vowed to defend is the narrow man-made waterway connecting the Atlantic and Pacific, the Panama Canal. The U.S. State Department that day issued a joint statement with Bolivia, Costa Rica, Guyana, Paraguay, and Trinidad and Tobago, saying China is pressuring Panama-flagged vessels “to politicize maritime trade and infringe on the sovereignty of Western Hemisphere countries.” The six countries, including the United States, added, “Panama is a pillar of our maritime trade system and must be free from undue external pressure.” As the global crude supply chain reels from Iran’s blockade of the Strait of Hormuz, the once quiet trade lane of the Panama Canal has suddenly emerged as a hot powder keg in the U.S.-China power struggle. The United States declared it will no longer stand by as Chinese influence looms over the Panama Canal, a choke point critical to its security and logistics. The move carries added weight because it came right after the world confirmed that a single narrow seaway, as seen after the Hormuz blockade, can shake both energy power and inflation. The main arena where the United States and China are vying for control is not the entire canal but two ports at its entrances. Those are the Balboa terminal on the Pacific side and the Cristóbal terminal on the Atlantic side of the Panama Canal. The two ports handle nearly 10 million containers a year. That rivals the annual container throughput (9 million) of the Port of Los Angeles (LA), the key gateway on the U.S. West Coast and the largest port in North America. In other words, the volume handled by the two terminals on either side of the Panama Canal is comparable to the total annual cargo volume processed by the largest port in the United States. The two ports had been operated since 1997 by CK Hutchison, owned by the family of Hong Kong’s richest tycoon Li Ka-shing, through its subsidiary Panama Ports Company (PPC). After nearly 30 years without incident, the port operating rights became embroiled last year in major corruption allegations during the renewal process. The Panama Board of Audit and Inspection filed a constitutional complaint last July, saying PPC, the operator at the time, extended its 25-year concession in 2021 without an open bid. According to the Board of Audit and Inspection, despite the canal’s massive cargo volume, excessive duty-free benefits and unpaid contributions combined to saddle the Panamanian government with cumulative losses amounting to $1.2 billion (about 1.8 trillion won). On Jan. 30 this year, the Supreme Court of Panama ruled that both Law No. 5 of 1997 and the 2021 renewal contract were unconstitutional. The court said, “The contract granted PPC excessive favors and harmed the national interest.” On the surface, it appears to be a measure by Panama’s judicial authorities to root out long-standing special favors. But experts said that behind it lies deep involvement by the United States’ security strategy to push out Chinese capital. The Panama Canal provides overwhelming strategic value to the United States. Though it is only about 80 kilometers long, 5% of global maritime trade passes through this chokepoint. In particular, more than 70% of the cargo transiting either departs from the United Stat