Why It Matters
The Congressional Research Service report “U.S.-Panama Relations: Overview and Issues for Congress” was published on June 16, 2026. The United States transferred canal control to Panama in 1999 under the Torrijos-Carter Treaties, which established permanent neutrality and required the withdrawal of U.S. military forces. The second Trump administration has focused its approach on the canal and other security concerns, while the 2026 National Defense Strategy identifies the waterway as key terrain and commits to guaranteeing U.S. military and commercial access.
Nearly 70 percent of canal cargo by weight originated in or was destined for the United States in fiscal year 2025, while about 40 percent of U.S. container traffic, valued at approximately $270 billion, travels through the canal annually. The security relationship has expanded through an April 2025 memorandum of understanding allowing temporary U.S. deployments at three Panama-controlled facilities, but opposition to the agreement contributed to nationwide protests and strikes. For Congress, the central policy question is how to pursue access and security cooperation while addressing Panama’s stated opposition to foreign military bases and lawmakers’ competing proposals on the canal’s future.
The Big Picture
The treaties signed in 1977 followed decades of U.S. control over the canal and transferred its operations to Panama in 1999, creating the legal framework that governs neutrality today. Panama Ports Company, a subsidiary of Hong Kong-based CK Hutchison Holdings, held a concession to operate the Balboa and Cristóbal ports until Panama’s Supreme Court annulled it in January 2026 after an audit by the comptroller general. The report also describes a security agenda that includes counternarcotics cooperation, with the State Department estimating that up to 40 Percent of northbound cocaine from Colombia passes through Panama’s exclusive economic zone.
Migration policy has produced a separate set of arrangements: crossings through the Darién Gap exceeded 520,000 in 2023, fell to 3,091 in 2025, and an expanded 2024 memorandum covered third-country migrants deported from the United States. Following the Supreme Court’s ruling that the International Emergency Economic Powers Act did not authorize the tariffs, President Trump imposed a 10% surcharge under Section 122 of the Trade Act of 1974. A panel of the U.S. Court of International Trade found in May 2026 that the Section 122 tariff was unlawful for most imports.
The Bottom Line
The report shows that Washington, D.C.’s Panama policy is moving through several channels at once, including defense agreements, port oversight, migration operations, drug interdiction, and trade authorities. Section 7019(a) of P.L. 119-75 designates $2 million in Foreign Military Financing for Panama. S.Res. 354 would request a State Department report on Panama’s human-rights practices, including treatment of migrants removed from the United States. The report identifies a separate congressional constraint in tariff policy, because the Constitution gives Congress authority over foreign commerce even though lawmakers have delegated some of that authority to the executive branch.
The memorandum establishes a framework to temporarily deploy an unspecified number of U.S. personnel to three Panama-controlled facilities for training, exercises, and other activities; the 18-month interim operating period was intended to give the Panamanian government time to rebid the concession; and a panel of the U.S. Court of International Trade found that President Trump could not legally impose the Section 122 tariff on most imports. For the Trump administration, the unresolved issue is whether its effort to secure canal access can be carried forward through cooperation with Panama without colliding with the treaty-based neutrality regime, domestic political resistance, or congressional authority.
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