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."

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.