The Trump administration announced major moves in the Panama Canal this week, with Defense Secretary Pete Hegseth explaining Thursday that the deals are a means of serving American interests and working to “stop the sphere of Chinese influence.”
The Panama Canal Authority confirmed in a press release Wednesday that Panama’s minister for canal affairs and Hegseth signed a joint declaration that reaffirms Panamanian sovereignty and outlines new military cooperation.
“We’re going to invest in ways that serve American interests in our backyard as we stop the sphere of Chinese influence,” Hegseth said Thursday on “The Will Cain Show.”
PANAMA AND US LOCK IN NEW SECURITY PACT FOR CANAL AS CHINA TENSIONS SIMMER
The deal “reaffirms respect for, and the recognition of, Panamanian sovereignty over the interoceanic waterway,” the Canal Authority stated.
It upholds both nations’ commitment to the Neutrality Treaty and the legal framework that governs canal operations, including Panama’s Constitution, the treaty itself and the Canal’s Organic Law.
The declaration laid out plans for a cost-sharing model to cover services provided to U.S. warships and auxiliary vessels, with the goal of keeping it “cost-neutral.”
“It’s in our direct U.S. interest to ensure that waterway is free and that our ships can transit freely. So, it was two historic arrangements that serve American interests, and it would never have happened without President Trump,” Hegseth said.
Hegseth said a broader framework is in the works, one that would guarantee U.S. warships “first and free” passage through the Panama Canal.
He announced Wednesday that U.S. and Panamanian officials had already signed a memorandum of understanding, and that a final document is on the way to formally secure toll-free priority for American naval vessels.
The defense secretary added on “The Will Cain Show” that the deal “codifies first, and it codifies a cost-neutral basis where we’re able to freely transit, and it saves our Treasury money,” noting the arrangement has an “economic upside” on top of the “strategic” interests.
US, PANAMA ‘TAKING BACK’ CANAL FROM ‘CHINA’S INFLUENCE,’ SAYS HEGSETH
Earlier this week, Hegseth visited U.S. troops, met with Panamanian officials and toured the canal. He warned that China’s reach in the Western Hemisphere is already too big, and still growing.
“What I saw down in Panama was not just about a canal,” Hegseth told Fox News host Will Cain. “Of course, the canal is very important and everything that goes through there. It was a tug-of-war with the communist Chinese.”
The administration’s arrangements with Panama come amid rising temperatures between the United States and China, largely spurred on by an escalating trade war.
As of Thursday, the White House said it had imposed 145% in new tariffs on China, up from the 125% Trump announced the day before.
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While hiking rates on China, Trump said he would reduce tariffs on other countries that did not retaliate against the United States to his baseline of 10%.
The tariff tit-for-tat has been ongoing since Trump announced his “Liberation Day” tariffs last week, but Hegseth said the trade war does not have to “lead to conflict, and I really hope it doesn’t.”
“President Trump has a great relationship with Xi Jinping. They speak often. There’s a mutual respect, and I think, ultimately, what President Trump wants to do is reestablish American manufacturing and not be taken advantage of,” Hegseth said.
Fox News Digital’s Elizabeth Elkind and Stephen Sorace contributed to this report.
