The United States and Panama have officially signed a new defense and security pact aimed at reinforcing control over the Panama Canal, a move that Defense Secretary Pete Hegseth claims is critical to pushing back against China’s growing grip in the region.

In a press release posted Wednesday night on X, the Panama Canal Authority confirmed that Panama’s Minister for Canal Affairs and Hegseth signed a joint declaration that reaffirms Panamanian sovereignty and outlines new military cooperation.

The deal “reaffirms respect for, and the recognition of, Panamanian sovereignty over the interoceanic waterway,” the Canal Authority stated. 

It also 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.

​​HEGSETH SAYS PANAMA AGREED TO ALLOW US WARSHIPS TO TRAVEL ‘FIRST AND FREE’ THROUGH CANAL

But the declaration goes beyond words. It lays 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.”
 

“Efforts will be made [to] develop a mechanism which will allow compensation for services provided to warships and auxiliary vessels, seeking a cost-neutral basis,” the statement reads. “This mechanism will be evaluated jointly with the Ministry of Security of Panama.”

Secretary of Defense Pete Hegseth speaks in Panama City on April 9, 2025. (FRANCO BRANA/AFP via Getty Images)

According to Hegseth, a broader framework is also in the works, one that would guarantee U.S. warships “first and free” passage through the Panama Canal.

Hegseth 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 Canal Authority, meanwhile, emphasized that this agreement is just the start. “The declaration constitutes a first step in establishing this model, which will be developed in later stages.”

US, PANAMA ‘TAKING BACK’ CANAL FROM ‘CHINA’S INFLUENCE,’ SAYS HEGSETH

While the U.S. builds up its military coordination, the Panama Canal Authority confirmed that collaboration already includes “engineering, security, and cybersecurity,” key focus areas for both governments as they push back against foreign interference.

The move comes just as the U.S. prepares to deploy the USNS Comfort, a Navy hospital ship, to the region in a show of presence and partnership.

Earlier this week, Hegseth visited U.S. troops, met with Panamanian officials, and toured the canal. He warned sharply that China’s reach in the Western Hemisphere is already too big, and still growing.

Panama’s President Jose Raul Mulino shakes hands with Secretary of Defense Pete Hegseth during the signing of a bilateral agreement in Panama City on April 9, 2025. (FRANCO BRANA/AFP via Getty Images)

“Make no mistake, Beijing is investing and operating in this region for military advantage and unfair economic gain,” Hegseth said. “They operate military facilities and ground stations that extend their reach into space. They exploit natural resources and land to fuel China’s global military ambitions. China’s factory fishing fleets are stealing food from our nations and from our people.”

Hegseth stressed that war is not the objective. “Together, we must prevent war by robustly and vigorously deterring China’s threats in this hemisphere,” he said.

He also made clear that the U.S. is taking steps to counter Chinese-controlled infrastructure in Panama.

“China-based companies continue to control critical infrastructure in the canal area,” Hegseth said. “That gives China the potential to conduct surveillance activities across Panama. This makes Panama and the United States less secure, less prosperous and less sovereign. And as President Donald Trump has pointed out, that situation is not acceptable.”

Panama’s President Jose Raul Mulino (C) looks on as Panama’s Security Minister Frank Abrego (L) and Secretary of Defense Pete Hegseth get ready to sign a bilateral agreement, in Panama City on April 9, 2025. (FRANCO BRANA/AFP via Getty Images)

Hegseth was blunt: “The United States will not allow China to threaten the canal’s operation.” He added, “To this end, the United States and Panama have done more in recent weeks to strengthen our defense and security cooperation than we have in decades.”

Despite the growing military and political coordination, Panamanian President José Raúl Mulino has publicly denied that China controls the canal.

“I completely reject that statement,” Mulino said, pushing back on earlier claims from the U.S. State Department that a deal had already been reached guaranteeing toll-free passage for U.S. warships. The Canal Authority added that it has “not made any adjustments” to its fee structure.

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Hegseth did not immediately respond to Fox News Digital’s request for comment.

Fox News’ Morgan Philips contributed to this report.