US and Latin American nations condemn China's retaliation after Panama Canal ruling

Bolivia, Costa Rica, Guyana, Paraguay, Trinidad and Tobago, and the United States have issued a joint statement in support of Panama, criticizing China's economic reprisals after a Hong Kong-based conglomerate lost a court case over the management rights of ports on the Panama Canal.

Panama's Supreme Court in late January cancelled the contract allowing a subsidiary of CK Hutchison (Hong Kong) to manage the Balboa and Cristobal ports on the Panama Canal, ruling that the decades-long agreements were unconstitutional.

In a joint statement on Tuesday, the six nations said that after the court ruling, China retaliated against Panama with "targeted economic pressure" on ships flying the Panamanian flag.

According to the US Federal Maritime Commission, China detained nearly 70 vessels flying the Panamanian flag in March, a number that "far exceeds normal historical levels."

The signatory countries stated: "These actions – following the ruling of Panama's independent Supreme Court regarding the Balboa and Cristobal ports – are a blatant effort to politicize maritime trade and infringe upon the sovereignty of nations in our hemisphere."

US Secretary of State Marco Rubio posted on X that Washington is "deeply concerned" about China's economic pressure on Panama.

He said: "We stand alongside Panama. Any effort to undermine Panama's sovereignty is a threat to all of us."

Earlier, China had accused the US of "bullying" and attempting to tarnish China's reputation in Latin America, while calling the Panama Supreme Court's ruling "irrational" and "shameful."

US Federal Maritime Commission Chair Laura DiBella said last month that Beijing's detention of Panamanian-flagged ships has consequences for both Panama and the US.

Ms. DiBella said: "These heightened inspections are conducted under informal directives and appear aimed at punishing Panama following the transfer of Hutchison's port assets. Since Panamanian-flagged vessels carry a significant portion of US container cargo, these actions could have substantial trade and strategic consequences for US maritime shipping."

'Nations know how vulnerable maritime shipping is'

The decision to cancel the contract of CK Hutchison's subsidiary – Panama Ports Company – came amid media focus on the Panama Canal, as US President Donald Trump threatened to seize the strategic waterway.

Trump has made the roughly 80 km waterway a focal point of his second term, accusing China during his January 2025 inauguration speech of "operating" the canal and vowing that the US would "take back" control.

US officials allege that beyond targeting Panama and its interests, China has also retaliated against shipping lines Maersk and MSC – the companies awarded an 18-month contract to manage the Balboa and Cristobal ports after CK Hutchison was removed.

The US Federal Maritime Commission said in March that representatives of Maersk and MSC were summoned by China's Ministry of Transport for "high-level discussions," while Chinese shipping giant COSCO suspended operations at Balboa port.

Separately, CK Hutchison, through its subsidiary Panama Ports Company, is pursuing international arbitration against the Panamanian government, seeking compensation of over $2 billion.

David Smith, associate professor at the US Studies Centre at the University of Sydney, said the Panama Canal dispute and China's retaliatory actions are the latest example of maritime shipping becoming a political target, from Latin America to the Strait of Hormuz and the Red Sea in the Middle East.

He told Al Jazeera: "We used to take for granted that the world runs on container ships freely moving everywhere. What we are seeing is that nations know how vulnerable maritime shipping is. They know they can cut off sea lanes if needed. From now on, it should come as no surprise if ships and the shipping industry in general become pawns in international politics."