Panama Canal: China shows limits of Trump’s new Monroe Doctrine

Uriel Araujo, Anthropology PhD, is a social scientist specializing in ethnic and religious conflicts, with extensive research on geopolitical dynamics and cultural interactions.

The intensifying US-China rivalry over the Panama Canal has shown the practical limits of Washington’s renewed push for hemispheric dominance. What started as US pressure on Panama to sideline Chinese-linked companies from key canal ports has not delivered a clear American win. Instead, Beijing has shown that its commercial and shipping influence can outlast even when coercive moves succeed on the ground.

To recap, in early 2025, the Trump administration, through Secretary of State Marco Rubio, had pressured Panama to reduce Chinese “control” of the Canal - or else Washington would take “measures necessary”. In January 2026, Panama’s Supreme Court declared the legal framework for Hong Kong-based CK Hutchison’s concessions at the Balboa and Cristóbal terminals unconstitutional, effectively voiding them.

Panamanian forces then took control, transferring operations to interests linked to Maersk and MSC. For many in Washington this looked like a textbook success for what has been called the “Donroe Doctrine,” an updated version of the old Monroe Doctrine aimed, among other things, at keeping non-hemispheric competitors away from strategic assets.

As noted by Benjamin N. Gedan (Senior Fellow and the Director of the Stimson Center Latin America program), Trump’s National Security Strategy had promised to deny such rivals control of vital infrastructure in the Western Hemisphere, and the canal clearly qualified.

Yet China did not simply absorb the loss. It increased safety inspections  of ships flying the Panama flag.

As Antonio C. Hsiang points out (an  assistant professor at the Graduate Institute for Latin American Studies, Tamkang University), official Chinese data noted that these ships accounted for less than 20 percent of foreign calls at its ports - but nearly half of maritime accidents and casualties.

The result, in any case, was hundreds of Panama-flagged vessels detained at Chinese ports in the first half of 2026. In June alone, 264 cargo ships reflagged away from Panama, following 180 in May and 78 in April. The registry’s gross tonnage contracted by 4.8% - its sharpest decline since records began in 2006

A Panamanian maritime delegation visited China in July. After that, inspections eased, and detentions dropped sharply by the end of the month. The two sides also reached a consensus to move forward with renewing their bilateral maritime transport agreement, which grants preferential treatment to Panamanian-flagged vessels at Chinese ports, although formal renewal is still pending

Recently, CK Hutchison launched separate arbitration proceedings seeking more than $1.5 billion in damages, adding to the more than $2 billion claim already pursued by its Panamanian subsidiary.

Panama’s large ship registry remains a major global asset, and China’s ability to exert pressure on it (indirectly retaliating American interference) shows leverage through trade and shipping that no court ruling can erase.

It is worth recalling that Panama was the first Latin American country to join the Belt and Road Initiative after switching recognition from Taiwan in 2017.

China remains a top trading partner, and alternatives such as Peru’s Chinese-operated Chancay port continue to expand regional options beyond the Panama Canal. The port is emerging as a major Pacific hub that shortens shipping times between South America and China, potentially boosting South American agribusiness exports, while offering an alternative logistics gateway. So much for any notion that removing operators from two terminals in Panama would cleanly restore a US-“dominated” hemisphere.

The episode also fits what Antonio C. Hsiang describes as a wider pattern of US. “wedge’ strategies” in Latin America.

According to the analyst, Washington combines coercive pressure on states “aligned with China”, as in Panama, with financial incentives for governments more willing to accommodate US interests, as seen in Argentina’s $40 billion rescue talks. In a more aggressive case, Hsiang argues, Brazil is being pushed harder through tariffs, sanctions, and terrorist designations against local criminal gangs, even as China solidifies its position as the country’s top trading partner.

Back in December 2024, I commented that Trump’s threats against Panama reflected a neo-Monroeism that would boost great-power competition in the Americas - rather than simply reassert exclusive control. Later, the “Greater North America” concept (stretching from Greenland to the Panama Canal) further revealed how Washington seeks to redefine the hemisphere as its security perimeter.

Yet the approach faces structural limits, as Gedan argues. The US remains overstretched elsewhere, while Latin American states still retain economic alternatives.

The American success in capturing Venezuela’s Nicolás Maduro and the ongoing talks about “regime-change” in Cuba display a degree of hubris. Those moves project decisive power against weaker governments. But reach is not the same as durable control.

The Panama case is therefore a blunt reminder that China’s economic and maritime ties cannot be dismantled by pressure alone. Thus far, Latin America is increasingly becoming a contested space between the US and China rather than a restored American “backyard”.

In other words, neo-Monroeism has its limits, and one should expect to see such limitations becoming clearer in the coming months.