US-Panama Canal Agreement Sends Shockwaves to Beijing, Escalates US-China Tensions

One of the world's most crucial waterways has become the focal point of a global power struggle. The United States and Panama have signed a new defense and security agreement aimed at curbing China’s expanding presence around the Panama Canal—a key trade artery that handles nearly 5% of global trade and 40% of U.S. container traffic.

U.S. Defense Secretary Pete Hegseth emphasized that the pact goes beyond military collaboration, highlighting its role in protecting global supply chains and securing strategic interests. Meanwhile, China's growing influence in the region—from port operations to telecommunications—is raising serious concerns in Washington. A recent $19 billion deal between Panama Ports Co. and a U.S. consortium has further escalated tensions, drawing backlash from Beijing and prompting an antitrust investigation.