This paper analyzes international externalities of a local shock to the global shipping network. The 2016 Panama Canal expansion removed a bottleneck in seaborne transportation, allowing much larger ships to pass. Using both reduced-form and structural methods in combination with novel satellite data on the movements of container ships, we find that trade increased significantly among country-pairs using the canal. We find that the global real income gains from the canal expansion were over three times greater than the income gains for Panama itself. An analysis of all links in the network reveals that most links are associated with positive and quantitatively important positive international externalities.