2 Panama Canal ports have dragged Panama into a tussle between
superpowers
[February 28, 2026] By
ALMA SOLÍS
PANAMA CITY (AP) — Two ports run for years by a Hong Kong-based company
at either end of the Panama Canal have thrust Panama into a geopolitical
tug-of-war between the United States and China.
Even before taking office for his second term, U.S. President Donald
Trump complained that China was running the Panama Canal, because of
concerns over the Hong Kong-based parent of the company running the
ports on either side.
The Panamanian government, which operates the canal, strongly denied any
Chinese control over the waterway. But in late January, Panama’s Supreme
Court ruled that the concession made to a local subsidiary of Hong
Kong’s CK Hutchison was unconstitutional. Panama has maintained it is
acting only in accordance with the law, but China has alleged that the
court case is a reaction to “hegemonic” pressure.
This week, the Panamanian government occupied the two ports and
designated two other companies to keep them running until the concession
can be rebid. And on Thursday, investigators removed boxes of documents
from Panama Ports Co.
China is not happy and threatened consequences for Panama. President
José Raúl Mulino responded Thursday, telling China “be careful,” adding:
“They need us more than we need them.”
Here is a look at the ports that have the attention of two of the
world’s superpowers:
Two key ports
Although Panama is not a big importer or exporter of goods, its canal
has made the country of 4 million residents a critical international
logistics hub.
Massive cargo ships arrive daily from Asia, Europe and both coasts of
the United States. Little of what they carry is for Panamanians, but
they unload their containers in Balboa, Cristobal and other ports for
onward shipping via smaller routes to their final destinations.
The Balboa Port on the Pacific Ocean side of the canal and the Cristobal
Port at the Atlantic end handle around 39% of all of Panama’s container
traffic. About 7,000 people work at the two ports.
The two ports have been operated by Panama Ports Company, a local
subsidiary of Hong Kong’s CK Hutchison, since 1997.
Trump administration calls port situation is unacceptable
Panama’s comptroller announced it was starting an audit of the Panama
Ports Co. concession on Jan. 20, 2025 the day of Trump’s inauguration.
Two weeks later, U.S. Secretary of State Marco Rubio arrived and made
clear that a Chinese company operating the ports was unacceptable to
Washington. He suggested that China could obstruct canal traffic if it
wanted to.
On July 30, 2025, the comptroller said he was filing a complaint with
the Supreme Court asking that the concession be found unconstitutional.
The court announced its decision finding it was unconstitutional at the
end of January 2026.
The audit by Panama’s comptroller alleged irregularities in the
extension of the concession, including massive lost revenue to Panama’s
government. After the country’s Supreme Court ruled the concession was
unconstitutional, authorities said they had a transition plan that would
avoid any unnecessary interruptions to port operations.
[to top of second column] |
Containers sit at the Balboa terminal, run by CK Hutchison's Panama
Ports Co., after Panama's government ordered the occupation of the
port following a Supreme Court ruling that the concession was
unconstitutional, in Panama City, Monday, Feb. 23, 2026. (AP Photo/Matias
Delacroix)
 The ports are located at the
entrances of the Panama Canal, but do not fall under the autonomous
Panama Canal Authority that operates the waterway.
Since the canal, in addition to cargo ships, also accommodates U.S.
warships, the United States sees national security implications. The
American-built canal was turned over to the Panamanians in 1999.
China’s reaction
Panama Ports Company started arbitration proceedings against Panama
after the court’s decision. It said the Panamanian government had
kept up a “campaign” against its concession for the past year
causing serious harm to the company.
It argues that its rights as an investor have been compromised and
is demanding unspecified compensation. Panama Economy Minister
Felipe Chapman said the company is seeking $1.5 billion. The
company’s concession to operate the two ports was just renewed in
2021 for 25 years.
After the court’s decision, Beijing’s office overseeing Hong Kong
affairs criticized the ruling, saying it showed that Panamanian
authorities were bowing down to “hegemonic powers.”
“Panama’s authorities should recognize the situation and correct
their course,” it said. “If they persist in their own way and refuse
to see reason, they will pay a heavy price both politically and
economically!”
The government’s seizure of the ports this week set off another
round of objections. Mulino said it was necessary to ensure their
continuing operation and to determine their real value.
“The more than 7,000 jobs continue without changes,” he said.
On Friday, Panama Ports Co. confirmed that Panamanian authorities
had seized documents.
“The state’s daily misinformation campaign is a mere distraction
from the fact that its forced takeover of the ports of Balboa and
Cristobal in Panama and occupation of the property of PPC has been a
failure due to the illegal, nontransparent and poorly coordinated
conduct of the state.”
Next steps
Mulino has said that the court’s decision is final and must be
respected.
The ports continue operating while the legal drama builds.
Chapman, the economy minister, said that arbitration could take
years. Meanwhile, the government is preparing to begin the process
for a new operator of the ports.
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