PANAMA CITY — President José Raúl Mulino on Thursday denied a claim by the Trump administration that the Central American country had agreed to eliminate tolls for U.S. government ships using the Panama Canal, in an apparent setback to U.S. diplomatic efforts.

Secretary of State Marco Rubio on Thursday said it was "absurd" that U.S. government ships are charged to use the Panama Canal after Panama denied a claim that it had agreed to allow them free traversal.

Marco Rubio forced into embarrassing walk back on Panama Canal claim - Marco Rubio claimed Panama had agreed to stop charging US vessels transiting through the canal