The newly appointed head of the Federal Maritime Commission (FMC), Louis Sola, threatened to issue substantial daily fines to the Panamanian government, and bar Panamanian-flagged vessels from calling at U.S. ports if the FMC finds that Panama’s laws or practices are harmful to U.S. shipping.

During an interview with CNBC January 28, Sola said that Panama has been inching closer to China, and that no-bid contracts give China an unfair advantage at the Panama Canal and nearby ports. He added that reports that Chinese companies are getting canal tolls refunded are “alarming.”

The FMC has received complaints that some Chinese companies are getting reimbursed for canal transits, while American companies pay the ocean carriers for the transits and associated costs, and are not being reimbursed. Sola also raised the issue of China’s no-bid contracts to operate two ports on either side of the canal, as well as other canal infrastructure projects. Hutchison Ports PPC manages and operates the Port of Cristobal on the Atlantic side of the canal and the Port of Balboa on the Pacific side of the canal.

The U.S. Senate held a hearing on January 28 about trade and security issues at the canal, at which Sola testified, with several Republican lawmakers pushing for an aggressive stance from the U.S.

On his first full day as U.S. President, Donald Trump reiterated his threats to return the Panama Canal to U.S. control. Panama President José Raúl Mulino pushed back, stating that the canal "is and will remain Panama's," while denying the allegation that any foreign nation is interfering with its day-to-day operations. 

Panama has independently operated the canal since 1999, 22 years after then-President Jimmy Carter signed a pair of treaties to phase out U.S. control.