On February 6, 2025, Panamanian President José Raúl Mulino publicly refuted the U.S. State Department’s claim that Panama had agreed to allow U.S. government vessels free passage through the Panama Canal.
He called it an "intolerable lie." Mulino emphasized that Panama's Constitution prohibits the president from unilaterally altering canal tolls, and expressed shock at the U.S. for making such statements without prior consultation.
This came one day after the U.S. State Department posted a message on social media stating that the Panamanian government had agreed to waive tolls for U.S. government vessels, which would save the U.S. government millions of dollars annually. However, the Panama Canal Authority quickly denied this claim, stating that no changes had been made to the toll structure. U.S. Secretary of State Marco Rubio had discussed the issue of toll exemptions for U.S. vessels during a visit to Panama, suggesting that the U.S. had an obligation to protect the canal in times of conflict and therefore should not pay tolls. Mulino, however, reiterated that such decisions would need to undergo legal review and could not be made unilaterally.
The incident has further strained diplomatic relations between Panama and the United States, especially in the context of U.S. President Donald Trump’s previous statements expressing a desire to "reclaim" control over the Panama Canal. The Trump administration had raised concerns over China's influence in the region, viewing it as a potential threat to U.S. national security. In response, the Panamanian government had begun reviewing contracts for canal port operations run by Hong Kong companies and announced its withdrawal from China’s Belt and Road Initiative to alleviate U.S. concerns. However, Panama now faces a difficult balancing act between maintaining its sovereignty and responding to U.S. pressure.
For Chinese enterprises, this development could impact their investments and operations in Panama, particularly in the port and logistics sectors. Chinese companies will need to closely monitor the diplomatic dynamics between Panama and the United States, assess potential policy changes, and develop strategies to ensure the continued stability of their operations in the region. This situation also reflects the intensifying competition for influence between China and the U.S. in Latin America. As Chinese companies expand into overseas markets, it is crucial to consider geopolitical risks, particularly in critical infrastructure projects. Strengthening communication with local governments and communities, ensuring transparency and compliance, will help mitigate potential political and operational risks.