By Reshma Kapadia
President Donald Trump's effort to reassert dominance in Latin America took a step forward Friday with a legal decision in Panama that raises questions about whether the U.S. will now push harder on that front.
The Supreme Court of Panama ruled that a contract that allowed a unit of Hong Kong's CK Hutchison to operate ports at both ends of the Panama Canal breached the country's constitution and is therefore invalid. American depositary receipts of the conglomerate fell 5% on Friday.
"The Panama Canal playbook is the template for the White House to arm-twist other LatAm governments to cancel or revoke infrastructure concessions given to Chinese firms across strategic sectors," Grace Fan, managing director of global policy research for TS Lombard, told Barron's via email.
The White House didn't immediately respond to a request for comment.
The Panamanian ports highlight the U.S.-China rivalry in the region. China for years has been building its footprint in Latin America. It has taken stakes in critical infrastructure such as ports, but also in telecom and energy.
The Trump administration, meanwhile, has made clear that its foreign-policy approach is focused on reasserting dominance in the Western Hemisphere. Trump has described China's control of infrastructure around the canal as a national security threat and had backed a BlackRock-led investor group's purchase of Hutchison's stake in the port operator.
The decision comes after Panama's comptroller conducted an audit, alleging irregularities in the 2021 extension of a contract that had been granted to the CK Hutchison unit. But it also comes amid growing U.S. pressure in the region.
The U.S. military attack and capture of Venezuela's Nicolás Maduro earlier this year offered an early view into Trump's new foreign policy approach in the region -- and put into question the $10 billion in outstanding loans Venezuela owes Chinese state banks. So far, the Trump team has indicated it will allow China to continue to buy Venezuela's oil, albeit at less of a discount than in the past.
But the Panamanian decision about the canal, which is a critical route for U.S. liquefied natural gas and chemical exports to Asia, could have bigger implications for China. The question is whether it will embolden Washington as it seeks effective control of infrastructure assets owned or controlled by Chinese companies.
"This is a victory for the Trump administration in reducing Chinese influence in the hemisphere," Ryan Berg, director of the Americas Program at the Center for Strategic and International Studies, said via email. "More broadly, however, BlackRock and Hutchison remain in talks about the blockbuster deal for ports in all geographies of the world, where the Chinese state has attempted to insert state-owned giant Cosco Shipping into the consortium as a major player."
Cosco's involvement, Berg says, could undermine the geopolitical attractiveness of a deal that was aimed at degrading China's global port network to address national security concerns. CK Hutchison owns 43 port terminals in 23 countries.
"The closer the ports are geographically to the U.S., the more dependent they are on U.S. trade and FDI; and the more leverage the White House has to pressure regional governments to derisk from China," TS Lombard's Fan said in a research note.
TS Lombard highlights Jamaica's Kingston port, which is operated by Chinese state-owned enterprise China Merchants Port Holdings. The company also owns a 90% stake in one of South America's largest container terminals at Brazil's second-largest port. It struck a deal early last year to buy a 90% stake in an oil terminal at Brazil's Porto do Açu, though that transaction has yet to close.
Cosco also has a 60% stake in Peru's deep-water, Chancay container megaport. The project, begun in a remote fishing town in 2024, is expected to slash transit costs by one-fifth between South America and China, according to TS Lombard.
Some of these assets could be sources of leverage for China. The ports on the Panama Canal, for example, are less than critical for Beijing because only one-fifth of the traffic through the waterway goes to China. It means they could be something Xi Jinping could trade for U.S. concessions in other areas when he meets with Trump in April, Fan adds.
"China will take all measures necessary to firmly protect the legitimate and lawful rights and interests of Chinese companies," Liu Pengyu, a spokesman for the Chinese, said via e-mail. The CK Hutchison unit has begun an arbitration process, challenging the court's decision.
Companies like Hutchison with critical assets in Latin America -- or those with infrastructure projects still in the planning phases -- could get caught in the middle. Latin American leaders, on the other hand, could use their assets as leverage for getting U.S. assistance, as Argentina did last year when the U.S. extended the country a lifeline amid debt issues.
That could give Latin American markets a boost, as Barron's outlined earlier this month.
Write to Reshma Kapadia at reshma.kapadia@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
February 05, 2026 09:42 ET (14:42 GMT)
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