What the Congress report reveals about the Panama Canal

Introduction: a technical document hiding a geopolitical battle

A report few people will read to the end

I'll admit it upfront: Congressional Research Service reports never thrill anyone. They're dry documents, full of numbers, dates, and legislative references. But the one published on June 16, 2026 on relations between the United States and Panama deserves attention, because it coldly exposes a reality that ordinary media coverage too often oversimplifies.

This CRS document doesn't tell a conspiracy story. It tells a story of real tensions around an infrastructure that still carries roughly three percent of global maritime trade today, and where nearly seventy percent of traffic by weight either comes from or is bound for the United States.

Why this file touches me personally

I spend my days analyzing tensions between the West and its strategic rivals, China, Russia, Iran, and North Korea. Panama seems far removed from those usual theaters. And yet, reading this report, I realized the canal represents a quiet but very real front in that same global rivalry, where Chinese economic influence collides directly with American strategic interests.

This testimony is not a report from the field. It is my reading, as a columnist, of a dense official document, which I render as rigorously as possible, without pretending to have visited the ports of Balboa or Cristóbal myself.

The economic weight of a canal under strain

Numbers that make your head spin

The Panama Canal generated roughly $5.7 billion in revenue during fiscal year 2025, a 14.4% increase over the previous year, according to the CRS report. That sum represents about six percent of Panama's gross domestic product, an economic weight hard to overstate for a country of barely 4.6 million people.

Roughly forty percent of all US containerized trade, valued at $270 billion, passes through this waterway every year. These figures alone explain why Washington cannot afford to treat the canal as just another diplomatic file among many.

An infrastructure still expanding

The Panama Canal Authority, which has administered the waterway since 1999, unveiled a ten-year roadmap in September 2025 projecting more than eight billion dollars in investment, including a liquefied petroleum gas pipeline and two new container terminals. These projects show the canal remains a long-term economic bet for Panama, far beyond the current political tensions with Washington.

The fact that these major infrastructure contracts are due to be awarded in 2027 means the competition for economic influence around the canal, between Western and Chinese firms, is far from over. Every future contract will be scrutinized closely by both camps.

Trump and the declared obsession with the canal

An inaugural speech that started it all

According to the CRS report, the second Trump administration made canal issues and other regional security concerns a top priority. The president publicly expressed concerns about Panama's administration of the waterway and about the growing influence of the People's Republic of China in and around the canal, going as far as saying he wanted to "take back" this infrastructure in his inaugural address.

Dramatic as these statements are, they fit into a broader goal the report names outright: restoring what the administration considers American "preeminence" in the Western Hemisphere, a region Washington has long viewed as its natural sphere of influence.

A strategy that goes beyond words

What sets this file apart from mere rhetorical posturing is the concrete translation of these concerns into diplomatic and military actions. The US Department of Defense listed the canal as "key terrain" in its 2026 National Defense Strategy, committing to guarantee American military and commercial access to this strategic zone.

The administration also publicly backed a Panamanian Supreme Court ruling voiding the port concessions of a firm linked to Hong Kong, a move that shows how far Washington is willing to go to sway the internal decisions of a sovereign country in the name of its national security.

The ports battle between Beijing and Washington

The fall of Panama Ports Company

The heart of the controversy rests on a twenty-five-year concession granted in 1997, renewed in 2021, to Panama Ports Company, a subsidiary of Hong Kong-based CK Hutchison Holdings, to manage the strategic ports of Balboa and Cristóbal at either end of the canal. On the very day of Trump's inaugural address, Panama's comptroller general announced an audit of the company.

That audit led to a complaint, then to a Panamanian Supreme Court ruling on January 29, 2026 that flatly voided Panama Ports Company's concession. In February 2026, the Panama Maritime Authority took back control of the ports, handing their temporary management to Swiss and Danish companies for eighteen months, giving time to launch a transparent bidding process.

The Chinese response came quickly

Beijing's reaction was immediate and measurable. CK Hutchison launched an international arbitration proceeding against Panama, while the Chinese government reportedly warned the country it would pay "heavy consequences" for this decision, according to the CRS report. In early March 2026, COSCO Shipping reportedly suspended its freight services at the port of Balboa, a barely veiled act of economic retaliation.

More worrying still, Chinese maritime authorities detained a growing number of Panamanian-flagged vessels in their own ports, prompting Washington to issue two statements in April 2026 openly criticizing these actions and reaffirming its support for Panamanian sovereignty against this economic pressure.

American troops return, quietly

The April 2025 memorandum

In April 2025, the United States and Panama signed a memorandum of understanding aimed at strengthening their cooperation on defense and security. The text provides for the return of a "rotational and joint" American presence in areas near the canal that once hosted military facilities before their full handover in 1999.

In practical terms, an unspecified number of American troops could be temporarily deployed to three Panama-controlled installations, notably near historic naval and air bases, for training activities and joint exercises, according to the terms detailed in the CRS report.

A new unit created in January 2026

The US military took a further step in January 2026 by creating the Army Security Cooperation Group-South, tasked with overseeing a joint group specifically dedicated to Panama. This structure aims to boost cooperation with Panamanian public security forces and improve military interoperability, including through a jungle warfare course revived in August 2025 after twenty-six years on hiatus.

This gradual return of an American military presence, even if limited and rotational, cannot be read as a mere technical cooperation exercise. It is a clear strategic signal aimed at Beijing: Washington intends to physically regain a foothold in a region it had largely abandoned since the 1999 handover.

Public anger at these agreements

Protests that lasted months

This security rapprochement was far from unanimously welcomed by Panamanians. From March to June 2025, national protests erupted over several sensitive issues at once: a controversial pension reform, the possible reopening of a copper mine closed in 2023, and above all the security memorandum signed with the United States in April of that same year.

More than forty civil society representatives and opposition leaders signed a declaration demanding the rejection of that agreement and two other deals with Washington, citing legitimate fears about Panamanian national sovereignty when facing a partner as powerful as the United States.

Controversial diplomatic retaliation

The CRS report reveals a troubling detail: two signatories of that opposition declaration, including former president Martín Torrijos, claimed the US State Department had revoked their visas in retaliation for their public stance. If confirmed, this allegation would illustrate American diplomatic pressure going well beyond normal dialogue between sovereign allies.

Panamanian authorities, for their part, have maintained that the memorandum in no way surrenders national sovereignty and that Panama will never accept permanent foreign military bases on its territory, a red line repeated several times by President José Raúl Mulino since his election in 2024.

A presidential popularity in free fall

Mulino, squeezed between two pressures

President Mulino is going through a difficult political period. In June 2026, fifty-nine percent of Panamanians disapproved of his performance, against only thirty-six percent favorable opinions, according to figures cited in the CRS report. This unpopularity stems largely from controversial economic reforms and from the constant pressure Washington exerts over the canal file.

Mulino finds himself in a delicate position: accepting stronger security cooperation with the United States to counter Chinese influence, while avoiding giving his own population the impression that Panama is becoming an American protectorate again, a historically toxic perception in a country that took decades to fully reclaim its sovereignty over the canal.

A minority coalition in the Assembly

Politically, Mulino doesn't even control a majority in Panama's National Assembly. His coalition holds seventeen seats, against twenty for the opposition Vamos coalition, which sharply limits his room to pass unpopular reforms or negotiate additional security agreements with Washington without a minimum of internal political compromise.

This institutional fragility makes Panama all the more vulnerable to outside pressure, whether from Washington or Beijing, with each power seeking to exploit internal political cracks to advance its own strategic interests in the region.

Trump goes on the offensive again in July

A statement that closes the loop

On July 1, 2026, just days before this piece was published, Trump publicly declared that the United States would not let China take back control of the Panama Canal, according to Reuters. This statement confirms the file remains red-hot even months after the Panamanian Supreme Court ruling that voided CK Hutchison's concession.

Trump's return to this rhetoric, nearly a year and a half after his first inaugural threats, proves the canal remains a central symbol of his foreign policy doctrine toward the Western Hemisphere, a region he considers America's strategic backyard.

A victory that remains fragile

Despite the cancellation of the Chinese concession and the temporary transfer of the ports to Danish and Swiss operators, nothing guarantees this American victory is final. The bidding process for long-term concessions, expected within eighteen months of the court ruling, could still hold surprises if Beijing-linked firms find an indirect way back into the competition.

I remain cautious about any declaration of definitive victory in this file. China has shown in the past a remarkable ability to slip back in through the side door where it was pushed out the front, often via financial intermediaries or complex corporate structures that are hard to trace.

Conclusion: a file to watch very closely

What the US Congress will now be watching

The CRS report concludes that the US Congress will continue closely examining military and commercial access to the canal, persistent Chinese influence, infrastructure security, and the case for a permanent rotational military presence. Several resolutions and bills, some explicitly aimed at limiting any unauthorized military action in Panama, reflect bipartisan vigilance on this sensitive file.

This legislative vigilance is a reminder that even within Washington itself, not everyone shares the Trump administration's more muscular vision for the canal, with some lawmakers preferring a more diplomatic approach respectful of Panamanian sovereignty.

My final take on this file

Having gone through this dense report, I remain convinced the Panama Canal will stay a major point of friction between the West and China in the years ahead. This small Central American territory, despite its modest size, concentrates on its own the economic and security tensions that define our geopolitical era.

By Maxime Marquette, columnist

Columnist's transparency note

On the nature of this testimony

This text constitutes my personal reading and analysis of an official Congressional Research Service report published on June 16, 2026, supplemented by public information reported by the international press. I had no access to any confidential source, and at no point do I claim to have personally witnessed the events described in Panama.

All statistics, dates, and quotes attributed in this text come directly from the CRS document or the articles cited as sources, with no extrapolation or invention on my part regarding publicly unconfirmed details.

My acknowledged bias

I believe preserving Western influence in the Western Hemisphere is strategically justified in the face of Chinese economic expansion. This personal conviction colors my interpretation of the facts reported here, even as I strive to acknowledge the gray areas and potential excesses of American diplomacy in this particular file.

Sources

Primary sources

EveryCRSReport — U.S.-Panama Relations: Overview and Issues for Congress — June 16, 2026

Secondary sources

The Telegraph — Trump, AI and Theodore Roosevelt: the Panama Canal debate — July 2, 2026

Reuters — Trump says the US will not let China take over Panama Canal — July 1, 2026

CNBC — Panama cancels China-linked port deal, hands canal terminals to Maersk and MSC — February 24, 2026

Axios — Chinese contract at Panama Canal canceled by court in win for Trump's "Donroe Doctrine" — January 29, 2026

Al Jazeera — 'Camouflaged invasion': Panama opposition slams security pact with the US — April 12, 2025