President José Raúl Mulino denies making a deal that US ships can transit the canal free of charge

The president of Panama, José Raúl Mulino, has accused the US of peddling a “quite simply intolerable falsehood” about the Panama canal, as Donald Trump’s pledge to “take back” the waterway continued to poison relations between the two countries and cause alarm around Latin America.

The US state department claimed late on Wednesday the Central American country had agreed to no longer charge US government vessels to pass through its canal – a move that would supposedly save Washington millions of dollars a year.