US government ships will no longer pay to transit through the Panama Canal, the US Department of State said on Wednesday, following fierce criticism from Washington over the administration of the waterway.

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 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.