PANAMA — Panama denied a claim made by the State Department on Wednesday that the Central American nation had agreed to no longer charge fees for US government ships to transit the country’s famous canal.

“In response to a publication released by the United States Department of State, the Panama Canal Authority, which is authorized to set tolls and other fees for transiting the Canal, reports that it has not made any adjustments to them,” the authority said in a statement, adding that it stood ready to establish a dialogue with the US.

Panama’s statement directly contradicted the State Department’s claim earlier in the evening.

“US government vessels can now transit the Panama Canal without charge fees, saving the US government millions of dollars a year,” the State Department said in a statement posted on X alongside an image of a naval vessel entering the canal’s locks.

Over the past 26 years the US has paid a total of $25.4 million dollars for the transit of warships and submarines, equivalent to less than one million dollars per year, according to a statement from Panama’s embassy in Cuba.

CNN has contacted the State Department for comment.

The latest controversy came just days after President Donald Trump reiterated his vow to “take back” the Panama Canal, warning of “powerful” US action in an escalating diplomatic dispute with the Central American country over China’s presence around the vital waterway.

“China is running the Panama Canal that was not given to China, that was given to Panama foolishly, but they violated the agreement, and we’re going to take it back, or something very powerful is going to happen,” Trump told reporters on Sunday.

Hours earlier, the diplomatic stir caused by Trump’s repeated and publicly stated desire for the US to retake control of the canal had appeared to ease after Secretary of State Marco Rubio, making his first overseas trip as the top US diplomat, met with Panama’s President Raúl Mulino.

Though Mulino told Rubio that Panama’s sovereignty over the canal was not up for debate, he also said he had addressed Washington’s concerns over Beijing’s purported influence.

Panama would not renew a 2017 memorandum of understanding to join China’s overseas development initiative, known as the Belt and Road initiative, Mulino said, also suggesting that the deal with Beijing could end early.

The canal was returned to Panama under a 1977 treaty, which allows the US to intervene militarily if the waterway’s operations are disrupted by internal conflict or a foreign power. Today, more cargo than ever runs through the canal than it did during the years of US control.

Since 2000 the canal has been operated by the Panama Canal Authority, whose administrator, deputy administrator and 11-member board are selected by Panama’s government but operate independently.

Panama Ports – part of a subsidiary of the Hong Kong-based conglomerate CK Hutchison Holdings – operates terminals on the Atlantic and Pacific sides of the canal. So do several other companies.

Hutchinson was first granted the concession over the two ports in 1997 when Panama and the US jointly administered the canal.

The company is publicly traded, not known to be on any US blacklists and their subsidiary Hutchinson Ports is one of the world’s largest port operators, overseeing 53 ports in 24 countries, including for other US allies such as the UK, Australia and Canada. Hutchison also does not control access to the Panama Canal. — CNN