Donald Trump has previously called for the Panama Canal to be returned to the US, and made allegations of Chinese influence in the area.
US secretary of state Marco Rubio has told Panama’s president the country must reduce alleged Chinese influence over the Panama Canal or face potential retaliation from America.
The comments were made in a face-to-face meeting with Panamanian President Jose Raul Mulino on Sunday.
It was Mr Rubio’s first foreign trip as America’s top diplomat and comes as Mr Mulino has so far resisted pressure from the US.
Mr Trump previously demanded the canal be returned to US control and has repeatedly made allegations about China’s influence in the area.
Allegations over China’s influence in the canal stem from two ports on either side which are run by publicly listed Hong Kong company CK Hutchinson.
“Secretary Rubio made clear that this status quo is unacceptable and that absent immediate changes, it would require the United States to take measures necessary to protect its rights under the treaty,” the State Department said in a summary of the meeting.
Speaking on behalf of Mr Trump, Mr Rubio said the US president had decided China’s presence in the canal area violates a treaty that led to the US turning the waterway over to Panama in 1999. That treaty calls for the permanent neutrality of the American-built canal.
“I don’t feel like there’s a real threat against the treaty and its validity,” Mr Mulino said after the meeting with Mr Rubio.
The canal, an important waterway for global trade, has emerged as a flashpoint for the new administration.
Mr Mulino said it had been a “good-faith meeting” that helped “to clear up doubts”.
He acknowledged that China’s role in the ports at either end of the canal had raised concerns with Washington.
But Mr Mulino said the consortium controlling them was being audited and the canal authority would give the US official a more detailed explanation.
He added that Panama would not renew its agreement with China’s Belt and Road Initiative when it expires.
