President Trump escalated tensions with Panama to unprecedented levels on Sunday, threatening to “recover the Panama Canal” even as Secretary of State Marco Rubio conducted delicate negotiations in Panama City.

“Something very powerful is going to happen,” Trump warned from Washington, casting a shadow over Rubio’s diplomatic mission and pushing hemispheric relations to their most precarious point since the 1989 U.S. invasion of Panama.

“The canal is not for China,” Trump declared to U.S. media, asserting that Panama had “violated the agreement” and making the extraordinary claim that 70 percent of canal signage appears in Chinese. His declaration that “China is running the Panama Canal” and that Panama’s actions threaten “the financial security of this part of the world” ignited immediate diplomatic tremors.

Trump subsequently announced plans for a direct phone conversation with Panamanian President José Raúl Mulino on Friday, and, while acknowledging Rubio’s “very good” meeting, expressed dissatisfaction with Panama’s commitments. “Essentially, they’ve committed to certain things, but I’m not happy with it,” Trump stated.

Mulino performed with calculated precision, balancing concession with sovereignty. Following what he described as a “highly respectful and cordial” meeting with Rubio, Mulino revealed his administration’s most significant shift: Panama would not renew its 2017

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