Panama Strengthens Ties with the U.S. Without

Panama plans to deepen its cooperation with the United States, focusing on shared interests such as cybersecurity and migration management. However, the Central American nation is steering clear of becoming involved in U.S.-China trade tensions, according to Finance Minister Felipe Chapman.

Impact of geopolitical tensions on Panama

The country unexpectedly found itself caught between the world’s two largest economies when Donald Trump threatened to take back control of the Panama Canal. The former president falsely claimed that the canal was under Chinese control. In April, U.S. Defense Secretary Pete Hegseth visited Panama and pledged to strengthen military cooperation after a BlackRock-led port deal was suspended due to pressure from China.

Panama avoids choosing sides between major powers

Chapman stressed that Panama is not sacrificing its relationship with China in favor of Washington. He reiterated that collaboration with the U.S. will be based solely on mutual interests, without compromising Panama’s strategic neutrality.

Historical relations with the United States

“Panama has always maintained a firmly pro-Western orientation and a strong relationship with the U.S.,” Chapman said during the International Monetary Fund’s spring meetings in Washington. He emphasized that the U.S. remains Panama’s top trading partner, investor, and source of tourism.

Customs Revenue Surges Following Trump’s New Tariffs

Customs revenue soared in April, reaching at least $15 billion, driven by former President Donald Trump’s…

Withdrawal from China’s Belt and Road Initiative

Following a visit by Secretary of State Marco Rubio in February, Panama withdrew from China’s Belt and Road Initiative. Chapman clarified that the decision was sovereign, denying that there was direct pressure from the United States.

Economic outlook for 2025

The IMF forecasts Panama’s economy will grow 4% this year, while public debt will climb to 58% of GDP. Chapman emphasized action. The government works actively to reduce the fiscal deficit to 4% by 2025. Authorities ruled out implementing abrupt tax measures to achieve targets.

Bond market and financial strategy

Panama’s dollar bonds face the risk of losing investment-grade status, with a yield spread of three percentage points over U.S. Treasuries. Chapman indicated that funding needs are already secured through mid-2025 and that the government will evaluate the best timing for future bond issuances.