By Gram Slattery

WEST PALM BEACH, Florida (Reuters) – President-elect Donald Trump threatened to restore U.S. control of the Panama Canal on Sunday, accusing Panama of charging excessive rates to use the Central American passage and drew a sharp rebuke from Panamanian President Jose Raul Mulino.

Speaking to a crowd of supporters in Arizona, Trump also said he would not let the canal fall into the “wrong hands,” warning of China’s potential influence over the route. After the event, he posted an image on Truth Social of an American flag flying in a narrow body of water, with the comment: “Welcome to the United States Canal!”

“Has anyone heard of the Panama Canal?” Trump said at AmericaFest, an annual event organized by Turning Point, an allied conservative group. “Because we’re torn apart by the Panama Canal like we’re torn apart everywhere else.”

Trump’s comments are a rare example of a US leader saying he might push a sovereign nation to cede territory. They also underscored an expected change in US diplomacy under Trump, which has historically not shied away from threatening allies and using bellicose rhetoric when dealing with counterparts.

“It was given to Panama and the people of Panama, but there are provisions,” Trump said of the canal, which was once owned by the United States but was ceded to Panama decades ago.

“If the principles, moral and legal, of this great act of giving are not followed, then we demand that the Panama Canal be returned to us, completely, quickly and without question.”

In a recorded message released by President Mulino of Panama on Sunday afternoon, the country’s leader said that Panama’s independence is non-negotiable and that China has no influence on the administration of the canal. He also defended the transit rates charged by Panama, saying they were not set “on a whim”.

China does not control or manage the canal, but a Hong Kong-based subsidiary of CK Hutchison Holdings has long managed two ports located on the canal’s Caribbean and Pacific channels.

The United States largely built the canal and managed territory surrounding the channel for decades. But the United States and Panama signed a pair of agreements in 1977 that paved the way for the return of the canal to Panama’s full control. The United States relinquished control of the passage in 1999 after a period of joint administration.

“Every square meter of the Panama Canal and the surrounding area belongs to Panama and will continue to belong (to Panama),” Mulino said in his statement, released by X.

Trump then responded to Mulino: “We’ll see about that!”

The waterway, which allows up to 14,000 ships to cross each year, accounts for 2.5% of global maritime trade and is vital to US imports of automobiles and commercial goods via ships in container from Asia, and for US export of commodities, including liquefied .

It’s unclear how Trump intends to regain control of the canal, and he has little recourse under international law if he decides to make a play for the passage.

This is not the first time that Trump has openly considered territorial expansion.

In recent weeks, he has repeatedly mused about making Canada a US state, though it’s unclear how serious he is about the matter. During his 2017-2021 term, Trump expressed interest in buying Greenland, an autonomous territory of Denmark. He was publicly disowned by the Danish authorities before any talks took place.