The State Department claimed it had struck a deal that would save the U.S. government “millions of dollars a year.”

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.

US Secretary of State Marco Rubio has walked back the assertion of the State Department that Panama “has agreed to no longer charge fees” to US government vessels transiting the Panama Canal after outcry from the Panamanian government.