The U.S. announced Wednesday that its government vessels would transit the Panama Canal free of charge under pressure from President Donald Trump, a claim swiftly denied by canal authorities.
"U.S. government vessels can now transit the Panama Canal without charge fees, saving the U.S. government millions of dollars a year," the State Department said in a post on social media platform X.
It was the first public announcement of promises hinted at by U.S. Secretary of State Marco Rubio, who said that Panama offered concessions during his talks on Sunday.
The Panama Canal Authority, which operates the vital link between the Atlantic and Pacific oceans, said no agreement had been reached.
"The Panama Canal Authority, which is empowered to set tolls and other fees for transiting the canal, reports that it has not made any adjustments to them," the agency said in a statement.
It said it was still ready to hold a dialogue with U.S. authorities. Rubio said he had told Panama that it was unfair for the U.S. to be in a position to defend the vital waterway and also to be charged for its use.
U.S. government vessels – which would be primarily from the Navy – make up a small portion of the ships that go through the canal. Aircraft carriers are too large to sail through the canal and must make the far longer journey around South America through the Strait of Magellan.
The U.S. and Panama are scheduled to hold new talks Friday to discuss the canal. Since winning the U.S. election in November, Trump has refused to rule out using force to seize the canal, through which 40% of U.S. container traffic passes.
Trump and Rubio have complained about Chinese investment – including ports on both sides of the canal – and warned that Beijing could close the waterway to the U.S. in a crisis. Panama has forcefully denied Trump's repeated allegations that China has been involved in operating the canal.
But it has also moved to address U.S. concerns. President Jose Raul Mulino, after his talks with Rubio, said that Panama would not renew membership in the Belt and Road Initiative, Beijing's signature infrastructure-building program.
Rubio told reporters on Monday that his talks with Mulino were "respectful" and that the visit was "going to achieve potentially good things that assuage concerns we have."
Trump, however, said that he was still "not happy," although he acknowledged that Panama had "agreed to certain things." Trump, in his inaugural address, said the U.S. would be "taking back" the canal – built more than a century ago by Washington with Afro-Caribbean labor and handed back to Panama at the end of 1999.
Mulino has also ordered an audit of Panama Ports Company, a subsidiary of Hong Kong-based conglomerate CK Hutchison Holdings, which runs the two major ports around the canal.
The company was granted a concession in 1997 that was extended for 25 years in 2021, despite rising concern in Washington as China has tightened its grip on Hong Kong, a former British colony that had been promised autonomy.
Panama became a key focus of the Trump administration after Trump accused the Central American nation of imposing excessively high fees for access to its trade route, one of the world's busiest.
In his Jan. 20 inauguration speech, Trump condemned the decision to hand over control of the canal, saying it was "foolishly given to the country of Panama."
He said the U.S. had "spent more money than ever spent on a project before and lost 38,000 lives in the building of the Panama Canal."
The U.S. was "treated very badly," he claimed, adding that "Panama's promise to us has been broken." Under a 1977 treaty, control of the canal was transferred to Panama, granting the U.S. the right to intervene militarily if its operations were threatened by internal unrest or foreign interference.
On Sunday, Trump reaffirmed his commitment to "take back" the canal, saying the U.S. would take "powerful" action amid what he called China's growing influence. He told reporters that "China is running the Panama Canal" and claimed that Panama had "violated the agreement."
On Tuesday, Secretary of State Marco Rubio, on his first overseas trip in his new role, met with Panama's President Raul Mulino.
While Mulino asserted that Panama's sovereignty over the canal was "not up for debate," he acknowledged Washington's concerns about China's influence, CNN reported.
He announced that Panama would not renew its 2017 memorandum with China's Belt and Road Initiative, a global infrastructure strategy aimed at expanding Beijing's economic influence through large-scale projects and suggested the deal could end early.
Mulino also expressed interest in strengthening ties with the U.S., stating that the visit "opens the door to build new relations" and expand American investments in Panama.
