The Panamanian leader says he was “incredibly surprised” by the statement, as President Trump threatens a U.S. takeover of the strategic waterway.

Panama President Jose Raul Mulino said on Thursday the U.S. was spreading "lies and falsehoods" after the State Department claimed U.S. government vessels would be able to pass through the Panama Canal without paying.

President Trump appeared to double down on his threats to seize the Panama Canal, as Secretary of State Marco Rubio arrived in Panama Sunday with an ultimatum from the White House.

Panama President Jose Raul Mulino on Thursday accused the United States government of lying a day earlier when the U.S. State Department claimed that U.S. government vessels would be able to cross the country's namesake canal without paying fees.

Panama President José Raúl Mulino has rejected the U.S. State Department’s claim that his country had reached a deal allowing U.S. warships to transit the Panama Canal for free

Washington had suggested Panama had agreed to no longer charge fees for US government vessels using the waterway.

Secretary of State Marco Rubio on Thursday said it was "absurd" that Panama charges U.S. government ships to use its canal.

Panama President José Raúl Mulino has accused the US of spreading "lies and falsehoods" after the US State Department claimed American government vessels were no longer required to pay a fee to transit through the Panama Canal.