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

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.

The Panama Canal Authority put out its own terse statement saying it had “not made any adjustments” to the fees.

Panama's president says the State Department's claim of an agreement granting U.S. warships free canal passage was "based on a falsity. And that's intolerable."

"If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, then we will demand that the Panama Canal be returned to us, in full, and without

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

The Panama Canal Authority on Wednesday denied the U.S. State Department's claim that U.S. government vessels would be able to cross the canal without paying fees, likely ratcheting up tensions after President Donald Trump threatened to take back control of the crossing.