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.

Panama President Jose Raul Mulino said on Thursday the United States was spreading "lies and falsehoods" after the State Department claimed U.S. government vessels would be able to pass the Panama Canal without paying.

Panamanian President José Raúl Mulino on Thursday denied the U.S. State Department’s claim that his country had reached a deal allowing U.S. warships to transit the Panama Canal for free. Mulino said he had told U.

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."

Panamanian President Jose Raul Mulino said on social media on Thursday that he would speak to his U.S. counterpart Donald Trump at 3:30pm on Friday afternoon, amid an increasingly tense standoff over the Panama Canal.

Navy use of the canal is infrequent, with about 40 vessels transiting annually, excluding the service’s aircraft carriers, which are too large. Allowing free access would reportedly save the U.S. about $13 million each year, according to the WSJ report.

Panama President Jose Raul Mulino on Thursday accused the United States government of lying a day earlier when the U.S. State Department claimed that U.S. government vessels would be able to cross the country's namesake canal without paying fees.

The Panamanian leader says he was “incredibly surprised” by the statement, as President Trump threatens a U.S. takeover of the strategic waterway.

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