NEW: Trump Notches Strategic Foreign Policy Win Following Panama Canal Ruling

Panama’s Supreme Court on Friday voided a contract held by a Hong Kong based firm, while Panamanian President José Raúl Mulino assured world leaders that canal traffic will continue uninterrupted during a transition period. The ruling marks a strategic win for President Donald Trump, whose administration has applied pressure on Panama to limit foreign influence over the canal.

The high court unanimously ruled that concession contracts held by Panama Ports Company (PPC), a subsidiary of Hong Kong-based CK Hutchison Holdings, to operate container terminals at the Balboa and Cristobal ports. The ruling voids the original 1997 contract and a 25-year extension granted in 2021, citing multiple violations of Panama’s constitution.

Justices highlighted several irregularities identified in an audit by Panama’s comptroller general. These included the granting of exclusive privileges and tax exemptions to PPC that were not available to competitors, the absence of required environmental impact assessments, and provisions requiring government approval from PPC before issuing other concessions.

The justices described these terms as creating a “de facto monopoly” without formal declaration, which disproportionately favored the company and failed to serve the public interest

President Mulino announced following the ruling that the Panama Maritime Authority (AMP) would collaborate with PPC during a transition period to maintain uninterrupted operations in the world’s most vital shipping lane. Once the concession is formally terminated, a local subsidiary of Danish shipping company A.P. Moller-Maersk will assume temporary management while the government launches a new public bidding process for a long-term operator.

CK Hutchison, controlled by Hong Kong tycoon Li Ka-shing, has been viewed by several geopolitical analysts as an extension of Chinese government influence. Prior to the ruling, CK Hutchison had been negotiating the sale of its stakes in the ports to a U.S.-led consortium including BlackRock Inc, but the deal stalled amid objections from the Chinese government, which insisted on including state-owned China Cosco Shipping Corp. in the buyer group.

The court’s decision effectively sidelines these negotiations and opens the door for new operators, potentially from the U.S. or Europe.

The United States is encouraged by the recent Panamanian Supreme Court’s decision to rule port concessions to China unconstitutional.

— Secretary Marco Rubio (@SecRubio) January 30, 2026

Friday’s ruling represents a strategic victory for U.S. interests, as President Donald Trump has repeatedly raised red flags about Chinese influence in the region. “China is operating the Panama Canal and we didn’t give it to China. We gave it to Panama and we’re taking it back,” the president said in his inaugural address last year.

He has also referred to the canal handover as a “rip-off” and threatened military action to reclaim it, emphasizing its importance to U.S. national security and economy.

U.S. Secretary of State Marco Rubio, who visited Panama in early 2025 as his first overseas trip, echoed these sentiments. “The United States is encouraged by the recent Panamanian Supreme Court’s decision to rule port concessions to China unconstitutional,” Rubio said in a statement following the ruling.

Panama had previously agreed to withdraw from China’s Belt and Road Initiative after President Trump threatened economic and potential military action. The Panamanian government also agreed to allow the U.S. to rotate troops, which are designed to secure the Panama Canal, counter Chinese influence in the region, and support regional anti-narcotics efforts.

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