Panama agrees to eliminate fees for US govt vessels transiting the canal

The US State Department on Wednesday announced that Panama has agreed to eliminate fees for US government vessels transiting the Panama Canal.

It further said the decision will save the US government millions of dollars each year.

Sharing a post on X, the US State Department wrote, "US government vessels can now transit the Panama Canal without charge fees, saving the US government millions of dollars a year."

The decision comes after US Secretary of State Marco Rubio arrived in Panama on February 1, marking his first trip since holding the job as US top diplomat.

Notably, after winning the US presidential elections last November, President Donald Trump had threatened to take control of the Canal accusing Panama of charging excessive rates on US ships passing through one of the busiest waterways in the world.

"Our Navy and Commerce have been treated in a very unfair and injudicious way. The fees being charged by Panama are ridiculous," Trump posted on his Truth Social platform in November.

The US largely built the canal in 1914 and administrated territory surrounding the passage for decades. But Washington fully handed control of the canal to Panama in 1999 after a period of joint administration.

Recently, Rubio had cautioned Panama about China's influence and control over the Panama Canal, calling the situation "unacceptable" and said that the US will take "necessary measures" if changes are not made.

During a meeting with Panamanian President Jose Raul Mulino and Foreign Minister Javier Martinez on February 2 in Panama City, Rubio conveyed Trump's concerns.

US President Donald Trump "has made a preliminary determination that the current position of influence and control of the Chinese Communist Party over the Panama Canal area is a threat," State Department spokesperson Tammy Bruce said in a statement.

Rubio made it clear that the current situation is "unacceptable" and in the case of "absent immediate changes, it would require the United States to take measures necessary to protect its rights under the Treaty," concerning the Permanent Neutrality and Operation of the Panama Canal.