Donald Trump has begun his second term as president by ramping up pressure on Panama – threatening to “take back” the Panama Canal and accusing the country of ceding control of the strategically critical waterway to a US rival: China.

By Frankie Mills Panama has strongly rejected US claims about securing free passage for government vessels through the Panama Canal, whilst announcing its withdrawal from China's Belt and Road Initiative amidst growing US pressure over alleged Chinese influence in the region.

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.

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."

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