China has intensified arbitrary detentions of Panama-flagged vessels under the pretext of routine inspections, a move that follows Panama's decision to take control of ports at either end of the Panama Canal from a Hong Kong-based operator. The retaliatory measures have drawn condemnation from Secretary of State Marco Rubio and sparked concern across Latin America about China's growing economic coercion in the region.
The ports of Cristóbal and Balboa, located at each entrance of the Panama Canal, were previously operated by CK Hutchison Holdings, a Hong Kong-based conglomerate. A Panamanian court granted Panama control of these strategic facilities, marking a significant shift in the country's management of canal-side infrastructure. China called the decision a violation of bilateral agreements, though Beijing has not specified which agreements were breached.
What the Right Is Saying
Conservatives have welcomed Panama's decision to reclaim control of canal-side ports and condemned China's retaliation as unacceptable bullying of a sovereign nation. Senate Foreign Relations Committee Chair Senator Jim Risch called China's vessel detentions "a direct attack on free trade and international law."
Secretary of State Marco Rubio issued a statement saying China's actions "destabilize supply chains, raise costs, and erode confidence in the global trading system." Rubio added that "the United States stands with Panama against any retaliatory actions against its sovereignty and will always support our partners in the face of bullying."
House Foreign Affairs Committee Chairman Brian Bean said China must "face real consequences" for its actions and called on the administration to consider additional sanctions against Chinese shipping companies. Former National Security Council official Michael Green told Fox News that China's behavior proves "the Belt and Road Initiative was never about development — it was about creating dependency and then using that leverage for political coercion."
What the Left Is Saying
Progressive Democrats and human rights advocates have long raised concerns about China's economic practices in Latin America, framing the current situation as evidence of Beijing's pattern of coercive diplomacy. Senator Chris Murphy said China's actions in Panama represent "the latest example of a superpower using economic leverage to intimidate smaller nations."
The Center for Strategic and International Studies noted that China's vessel detentions "mirror tactics used against the Philippines in the South China Sea" and warned that such actions could destabilize global supply chains. Progressive groups have also pointed to reports of labor practices at Chinese-owned facilities in the region, with organizations including the International Labour Organization documenting concerns about worker protections at some Chinese-operated mines and infrastructure projects.
House Progressive Caucus Chair Pramila Jayapal stated that "Latin American nations should be free to make sovereign decisions about their infrastructure without fear of economic retaliation," adding that the U.S. should "support diplomatic solutions that respect Panama's sovereignty while holding China accountable to international trade norms."
What the Numbers Show
The Panama Canal handles approximately 14,000 transits annually, with roughly 40% of U.S. containerized cargo passing through the waterway. Any disruption to shipping through the canal has significant implications for global trade flows.
Panama's decision to take control of Cristóbal and Balboa ports followed months of negotiations with CK Hutchison. The company had operated the facilities since 1997 under concessions that were set to expire in 2030. The Panamanian government valued the ports' combined throughput capacity at 4.2 million TEUs annually.
China's trade with Latin America reached $450 billion in 2025, according to the China-Latin America Business Council. However, several countries have recently shifted away from Chinese infrastructure deals. Honduras announced plans to restore diplomatic ties with Taiwan, Bolivia imposed new controls on Chinese zinc mining operations, and Chile suspended a proposed submarine cable project involving Chinese firms.
Peru's Chancay Port, operated by a Chinese consortium, handles approximately 1.5 million TEUs annually and has become one of the largest Chinese-owned infrastructure projects in South America. The U.S. Bureau of Western Hemisphere Affairs has warned that "cheap Chinese money costs sovereignty" in reference to such projects.
The Bottom Line
China's retaliation against Panama marks a new phase in Beijing's Latin America strategy, one that regional analysts say has backfired by galvanizing opposition across the continent. Several countries — including Honduras, Bolivia, Chile, Argentina and Peru — have recently taken steps that signal growing skepticism toward Chinese investment and influence.
The vessel detentions have already caused shipping delays, with maritime tracking data showing a 23% increase in wait times for Panama-flagged vessels at Chinese ports since the policy began. Supply chain experts warn that prolonged disruption could increase costs for U.S. consumers and businesses that rely on goods transiting through the Panama Canal.
What happens next will depend largely on whether China escalates its retaliation or seeks a diplomatic off-ramp. The Trump administration has indicated it will continue to support Panama and other regional partners against economic coercion, though specific responses remain under consideration. Regional observers note that the Monroe Doctrine corollary invoked by President Trump has given countries political cover to reassess their relationships with Beijing, potentially accelerating a realignment that began years ago.