PANAMA CITY: Panama President Jose Raul Mulino said on Thursday the United States was spreading “lies and falsehoods” after the State Department claimed US government vessels would be able to pass the Panama Canal without paying.

The comments were likely to exacerbate tensions between the two countries, marking a setback after the US had cited progress on military cooperation and confronting alleged Chinese influence over the canal.

Panama has been in the White House’s cross hairs since President Donald Trump claimed the country’s vital waterway had effectively been taken over by China and vowed that the US was “taking it back.”