A Panamanian court has ruled that a major Chinese-linked contract involving the Panama Canal is unconstitutional, dealing another significant setback to Beijing’s influence in the Western Hemisphere and marking a victory for President Donald Trump’s push to reassert U.S. strategic interests in the region.
The Supreme Court of Panama issued a final decision voiding the contract renewal that allowed a subsidiary of CK Hutchison Holdings to operate two ports connected to the Panama Canal.
The ruling invalidated a 25-year extension granted in 2021, citing constitutional and financial irregularities.
The court found problems with the renewal that had allowed CK Hutchison to maintain control over infrastructure tied to one of the world’s most critical maritime chokepoints, linking the Atlantic and Pacific Oceans.
The position had drawn scrutiny and opposition from Washington.
The case was legally challenged last year over allegations that CK Hutchison violated the terms of its concession agreements, including the 2021 renewal, harming Panamanian taxpayers and breaching the country’s constitution.
The lawsuit followed an official audit by Panama’s government, claiming CK Hutchison’s management shortchanged the country by roughly $1.3 billion.
The legal challenge came amid sustained pressure from the Trump administration on Panama City to curb Chinese leverage over the canal and its ports.
During the dispute, CK Hutchison announced a deal to sell its majority stake in the Panamanian ports, along with other assets worldwide, to an international consortium that included BlackRock.
The $22.8 billion transaction later appeared to stall amid objections from the Chinese government.
President Trump publicly praised the proposed sale in March, after the administration began intensifying its focus on Panama nearly a year earlier.
That effort included a January 31, 2025, visit by Marco Rubio, his first foreign trip as Secretary of State.
Rubio’s trip elevated control of Panama’s ports to a top U.S. priority in Latin America policy.
Trump has repeatedly emphasized the strategic importance of the Panama Canal.
The major shipping route was built by the United States in the early 20th century and transferred to Panama in 1999.
The president has made clear his desire to see American influence restored over the vital trade route.
Panama has increasingly fallen under scrutiny as part of what the administration has described as the “Donroe Doctrine.”
The country was previously the site of Operation Just Cause, the 1989 U.S. military intervention that deposed dictator Manuel Noriega.
The operationwas justified in part as necessary to protect the canal.
Some observers have suggested that safeguarding the Panama Canal could again be cited as a rationale for American intervention in the future.
On Thursday, ahead of the ruling, a senior White House official told Axios:
“It’s not just a huge win for Panama’s taxpayers, it’s a big win for America and certainly for President Trump.”
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