Panamanian President Jose Raul Mulino announced on Sunday that the country will not renew its agreement with China’s Belt and Road Initiative, following a meeting with U.S. Secretary of State Marco Rubio. Previously, President Donald Trump had accused Panama of violating the treaty established by former President Carter, citing unfair canal fees and the nation’s growing ties with China. After discussions in Panama City, Mulino told reporters that the agreement is set to expire within the next one to two years, though he is considering ending it sooner.

This decision marks a major setback for China’s influence in the Western Hemisphere, as Panama was the first Latin American nation to join the Belt and Road Initiative. This large-scale Chinese project aims to revive the ancient Silk Road trade routes by funding infrastructure in participating countries, often securing economic and security leverage in the process. Chinese companies currently operate ports near the Panama Canal, and Panama was the first Latin American country to participate in the initiative. The canal itself remained under U.S. control until 1999, when it was transferred to Panama under a treaty negotiated by former President Jimmy Carter in the late 1970s.