Panama: Trade Partnerships

Panama's economy has long been organized around its role as a global transshipment hub rather than around exports of domestically manufactured goods. The Panama Canal, fully transferred to Panamanian control in 1999, remains central to that identity, while the Colón Free Trade Zone, one of the largest free trade zones in the world, drives a substantial share of the country's re-export trade. Rather than joining regional blocs such as the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), Panama has pursued trade liberalization chiefly through its own network of bilateral agreements.

Panama's trade relationships today are dominated by the United States. As of 2026, the United States remains Panama's leading trading partner, both as the largest source of imports and as a top destination for exports, followed by China, the Netherlands, and regional partners such as Costa Rica. Imports are weighted toward machinery, fuels, and consumer goods, while agricultural products such as bananas and seafood, alongside iron and steel waste, lead exports. Panama's relationship with China has cooled sharply since early 2025, when Panama declined to renew its participation in China's Belt and Road Initiative amid pressure from the United States; tensions escalated further after a January 2026 Panamanian court ruling voided a Hong Kong-based firm's concession over canal-area ports, a decision Beijing called grounds for retaliation and that was followed by increased Chinese customs scrutiny of Panamanian exports.

Panama's trade architecture rests on an extensive network of free trade agreements, including a bilateral United States-Panama Trade Promotion Agreement that entered into force in October 2012, distinct from the CAFTA-DR arrangement that governs trade for its Central American neighbors. Panama is also a member of the World Trade Organization and maintains free trade agreements with numerous other partners across Europe, Asia, and the Americas.