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Last week, Secretary of Defense Pete Hegseth completed a highly anticipated trip to Panama. Hegseth spent several days in the country as part of the 2025 Central American Security Conference, signaling yet again that the Trump administration intends to refocus efforts on the Western Hemisphere and homeland defense. For instance, the last visit of a secretary of defense occurred in 2004, when Donald Rumsfeld visited Panama.
In an environment of heightened tension over China’s burgeoning role in Panama, the trip contained several notables—specifically, the agreements signed regarding the defense of the Panama Canal, a pathway to resolve the issue of transit fees for U.S. naval vessels, and a framework for deeper security cooperation. These developments are noteworthy because they provide a foundation, over time, to further reduce Chinese influence in Panama.
“First and Free”: Deliverables from the Visit
Hegseth sought to build on Secretary of State Marco Rubio’s earlier visit and continue to chip away at Chinese influence in Panama. The secretary of defense focused his trip on the issues of defense of the canal and U.S.-Panama security cooperation.
While in the country, the United States and Panama signed two documents of note. One is a memorandum of understanding on enhanced security cooperation. The other document is a joint declaration—what the two sides are calling a framework—on the security and operation of the Panama Canal. As part of the latter agreement, Hegseth laid the foundation to resolve the nettlesome issue of transit fees for U.S. naval vessels.
The memorandum of understanding establishes a basis for deepened security cooperation between the United States and Panama. In a move full of symbolism for the United States, Hegseth said that U.S. troops would have access to three locations: Panama Pacífico (Howard Air Force Base), Naval Base Balboa (Rodman Naval Base), and Aeronaval Base Cristóbal (Fort Sherman), bases formerly operated by the United States until the handover of the canal. Importantly, the secretary of defense stressed that any troop presence in Panama would occur in a rotational capacity only. The idea of a permanent troop presence returning to the country not even three decades after the handover of the canal remains highly controversial in Panama. The aforementioned facilities will remain under Panama’s control, but joint control will be exercised during the rotational exercises when U.S. troops will be present. A status of forces agreement signed several years ago provides further protections for U.S. troops rotating in Panama for training exercises.
Regarding the second document, in a joint declaration, Hegseth reaffirmed the neutrality of the Panama Canal and reiterated that securing it is a shared endeavor between the United States and Panama—in his words, standing “shoulder-to-shoulder.” “The Panama Canal is key terrain that must be secured by Panama, with America, and not China,” said Hegseth. “I want to be very clear: China did not build this canal, China does not operate this canal, and China will not weaponize this canal,” Hegseth continued. In its first bullet point, the joint declaration also included the innovative phrase “first and free” to describe the transit of U.S. naval vessels. The Pentagon’s readout indicates that the Panamanians are committed to developing a mechanism to compensate the United States for transit fees, with the reimbursement serving as an elegant workaround of the Carter-Torrijos Treaties’ requirement for the canal to remain neutral to all vessels. Notably, the Panamanian side did not employ the expression “first and free,” while highlighting that any payments to the United States would be for services and support, such as cyber security around the canal zone. Deeper cooperation with the United States, however, could result in a more secure Panama Canal, better training and preparedness for Panama’s defense, and greater cyber defenses.
Enduring Chinese Influence
China-Panama relations accelerated rapidly following the latter’s diplomatic switch away from Taiwan in 2017. China has invested in strategic infrastructure projects that include ports on both ends of the canal, telecommunications, and road projects worth more than $2.5 billion. The People’s Republic of China (PRC) also won a prized tender to build the so-called fourth bridge across the canal. In 2021, the two ports of concern, Balboa and Cristóbal, run by Panama Ports Company, a subsidiary of Hutchison Port Holdings (itself a subsidiary of CK Hutchison Holdings Limited), received a no-bid, 25-year renewal of its contract to continue operating.
Regarding the security risks presented by the two ports specifically, CSIS has previously noted elsewhere:
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As highlighted in the SOUTHCOM posture statement, PRC facilities at either end of the canal could deny access or cause service disruption via several direct or indirect methods. This could include electronic or cyberattacks, Global Positioning System (GPS) jamming, or physical attacks from containerized anti-ship weapons systems. Any disruption would add weeks to maritime response times for contingencies in the Pacific—a well-known vulnerability since at least World War II. A 2024 congressional hearing validated this idea, noting how Hutchison’s control over the strategic canal’s two ports could interfere with or delay U.S. shipping and military assistance to Taiwan in the event of a conflict. The ports of Balboa and Cristóbal are vital points of entry to the Pacific and Atlantic Oceans. Each PRC-built infrastructure project presents another point of vulnerability for the operations and security of the canal.
Recent events have lent credence to the Trump administration’s alarm over Chinese influence near the canal. In early March, BlackRock, Inc., announced its intention to purchase Hutchison Port Holdings, including a 90 percent stake in Panama Ports Company. In total, this blockbuster deal involves 43 ports in 23 countries—199 berths overall. The deal, valued just shy of $23 billion, would see about one-third of China’s global port infrastructure change hands in one fell swoop.
After an initial silence, the PRC kicked its information apparatus into overdrive, inveighing against both the deal and Li Ka-Shing, Hong Kong’s wealthiest man and former chairman of CK Hutchison. Ta Kung Pao, a party mouthpiece in Hong Kong, called Li a “traitor,” reminding him that the best entrepreneurs are patriotic and take into consideration China’s national interests when conducting business. The Global Times, another party mouthpiece, amplified this narrative. Further, Chinese media claimed that BlackRock’s purchase of the two ports could be used to control the canal and would prejudice Chinese commercial interests.
After the information campaign, China announced that its state market regulator would review the proposed sale. Not even a Hong Kong–based company that has moved its assets to another jurisdiction, and whose main markets are Europe and the United States, is removed from the long arm of Chinese national security law. As a result, BlackRock and Hutchison delayed a planned deal closing on April 2. The PRC would like to scuttle the deal entirely, but in the process, it has appeared secretive and defensive, and confirmed some of the Trump administration’s worst fears—i.e., that China seeks to maintain influence over the canal and other critical waterways with an expansive global port network. Simultaneously, Panama’s internal audit found that Hutchison had failed to pay more than $1 billion to Panama over several decades, a claim it denies. Nevertheless, it appears Panama’s domestic process may result in Panama Ports Company losing the two port concessions in question.
Leveraging the New Tools
The agreements signed by Secretary of Defense Hegseth are flexible tools for the United States to deepen its relationship with an old partner positioned in the most strategic geography in Latin America. Beyond its media campaign and attempt to shutter the BlackRock-Hutchison deal, China is no doubt contemplating its next set of moves. As the United States and Panama move forward together, both sides must be tactful when leveraging these tools.
The United States should move forward carefully but strategically to avoid damaging pro-American President José Raúl Mulino’s standing domestically, where the political opposition is keen to ensure these issues have a cost for Mulino and which require him to deploy his shrinking political capital to navigate effectively. Even temporary U.S. troop rotations in Panama are seen by some in Panamanian society as controversial, given the sensitivities many in the country feel about the canal. Thus, leveraging these documents to their fullest extent in great power competition with China will require deft diplomacy and a sound media campaign by both countries to dispel rumors and disinformation amplified by the PRC. The task at hand now is to maintain trust and ensure the relationship remains a font of strength for both sides.
Ryan C. Berg is director of the Americas Program and head of the Future of Venezuela Initiative at the Center for Strategic and International Studies in Washington, D.C.
