The challenge between China and the USA passes through the Panama Canal: after Hormuz, even maritime routes once again become decisive for global power
Eighteen days of mud, suffocating heat and poisonous fauna. The soldiers call it “green hell”: it is the training course in the jungle of Panama launched by the American armed forces last October, in collaboration with local troops, marking the return of the stars and stripes amphibians to the soil of the small Central American country after a quarter of a century.
It is just one of the developments with which the Trump administration has followed up its desire to reaffirm Washington’s dominance over the western hemisphere of the globe. Of which the Panama Canal constitutes a fundamental navigation hub: 6% of world trade and 40% of US cargo ships pass through here. Too important to leave it in the clutches of its true rival for global supremacy: the Chinese Dragon.
The importance of this cut in the Central American isthmus is increasing exponentially after the geopolitical storm that has hit maritime trade. First the attacks by the Yemeni Houthis in the Strait of Bab el-Mandeb, then the Iranian blockade of the Strait of Hormuz, forced global logistics to make sudden rethinks. In particular, East Asian markets such as Japan, South Korea, Taiwan and Singapore have abruptly replaced Arab oil with US light crude and gas, which they ship along the coasts of Texas and Louisiana.
The consequence was a 70% increase, on an annual basis, in the transit of hydrocarbons through the Central American isthmus. Furthermore, tankers are not the only ones to have increased crossings: container ships are also increasing their crossings from one side of the continent to the other.
The Panama Canal thus finds itself constantly operating at the limit of its capacity, with approximately 36 crossings per day. An increase in demand that astute managers have been able to capitalize on. Ships without reservations, in fact, must participate in blind auctions to win passage; Due to the extreme urgency, shipping companies are therefore paying auction premiums of up to $4 million per single transit, in addition to normal tolls.
However, all that glitters under the tropical sun is not gold: to maintain this operational efficiency the Authority faces treacherous challenges. Firstly, an unfortunate coincidence: right now, in June, already scheduled structural maintenance work on the Neo-Panamax locks will start, which will further congest naval traffic. Added to this are the unforeseen events: the canal operates through an artificial system of gravity locks fed by the waters of Lakes Gatun and Alajuela, which depend entirely on rainfall to fill. Already between 2023 and 2024, a severe drought had forced the number of daily passages to be reduced to between 18 and 22 due to lack of water. Today, the threat is the return of the climatic phenomenon known as El Niño, even if Panama City reassures them that they have made sufficient water supplies in reserve reservoirs.
These are just some of the challenges that Ilya Espino de Marotta, the next first woman in history to lead the Panama Canal, will have to face. Her mandate as Administrator of the Infrastructure Management Authority will officially begin on October 1 and will last seven years. Unlike her current boss, the economist Ricaurte Vásquez Morales, the tenacious manager is an engineer and oversaw the project to double the canal’s capacity, successfully completed in 2016. An important experience for those who will now have to manage two mammoth infrastructure projects, costing several billion dollars: the construction of two new container terminals and a gas pipeline, which will run parallel to the waterway. The Panamanian government, led by José Raúl Mulino, will meanwhile have to juggle to survive like the proverbial earthenware pot between the American and Chinese iron pots.
Panama is another point of global contention between the two superpowers. It was clear as soon as Trump set foot back in the White House: in his inauguration speech, the president announced that Washington would take back the canal, directly controlled by the US until 1999, but then slipped into the Chinese area of influence. Beijing has been involved in its management for some time: already in 1997 a subsidiary of the Chinese CK Hutchison Holdings had taken over the concession of the ocean terminals of Balboa and Cristóbal. A precious asset that the Dragon had no intention of letting slip away, so much so that last year it blocked its planned sale to the American investment fund BlackRock.
However, what triggered the red alarm in the halls of power in Washington was the expansion plan for the container terminal of another port, that of Colón, presented by a Chinese consortium at the beginning of this year.
In fact, the project involved the installation of new automated cranes that would have made the clients, and therefore also the Chinese government, able to visually and digitally monitor the Atlantic entrance of the canal. US Secretary of State Marco Rubio himself went so far as to publicly warn Panama that the construction of the infrastructure would represent a “direct threat to the democratic sovereignty of the region”.
Thus, the government, which had already withdrawn from the new Silk Road in 2025, capitulated. First, in February, it revoked the concession from CK Hutchison Holdings and took away control of the two ports; then, in April, it suspended the consortium’s construction permits in Colón, citing bureaucratic irregularities. A very welcome move in Washington, so much so that the United States, together with Bolivia, Costa Rica, Guyana, Paraguay and Trinidad and Tobago, signed a joint declaration to protect Panama’s sovereignty.
The Chinese retaliation was not long in coming: Beijing inflicted a series of blows on the weak points of the Panamanian economy. On the pretext of alleged bacterial contamination, it blocked over 40% of the Central American country’s beef and coffee exports in its ports, sparking protests from producers against the government. He also ordered port authorities to subject ships flying the Panamanian flag – the world’s largest shipping registry – to extraordinary safety inspections. Furthermore, it has indefinitely suspended all low-interest financing granted for public infrastructure in Panama (even so the Dragon’s long arm reaches the globe), while Chinese state construction firms have withdrawn their bids for road maintenance contracts, leaving important public works in a state of financial paralysis. Finally, a few days ago Cosco Shipping (and its subsidiaries) suspended all container services in the Panamanian port of Balboa.
And as the crisis over the Panamanian terminals turns into a geopolitical and commercial clash, Washington flexes its muscles. Wanting to demonstrate that the tropical country’s military security is not in question, a few weeks ago it organized the largest exercise ever seen here – Panamax 2026 – in which over twenty allied nations took part. And the nuclear-powered aircraft carrier USS Nimitz and the destroyer USS Gridley appeared in the waters facing the canal.
“Reassurances” for the Panamanian government which perhaps also serve as a warning: it is better not to forget the fate of the last leader of the country to have caused too much displeasure in Washington, that Manuel Noriega who was deposed in 1989 with a full-blown American invasion and ended up in prison for the rest of his days. Another era and another character, but one that teaches something: the indispensable strategic value of those 82 kilometers of canal.
