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.

U.S. Secretary of State Marco Rubio has told Panama’s president that the country must reduce Chinese influence over the Panama Canal area or face potential retaliation from the Trump administration.

Amid pressures from President Trump, Panama will “optimize transit priority” of U.S. Navy ships and will not renew its participation in China’s Belt and Road Initiative.