Recent diplomatic and legal developments have substantially lowered the likelihood of direct U.S. control over the Panama Canal. Under sustained U.S. pressure, Panama’s Supreme Court annulled the long-standing port concessions held by a Hong Kong-linked operator at the canal’s Atlantic and Pacific entrances, prompting the government to seize the facilities in early October 2026 and transfer interim operations to Western firms. These steps address American concerns about neutrality under the 1977 treaties and Chinese commercial presence without requiring U.S. seizure of the waterway itself, which remains under Panamanian administration. Traders assign only a 2.7% chance of U.S. takeover before 2027 because bilateral cooperation and targeted pressure have advanced core U.S. objectives. Potential shifts could still arise from abrupt escalation in U.S.-China tensions, a reversal by Panama’s leadership, or an unforeseen security incident at the canal before the end of 2026.