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

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 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.