Pakistan, Feb. 6 -- The Panama Canal Authority on Wednesday denied the US State Department's claim that US government vessels would be able to cross the canal without paying fees, likely ratcheting up tensions after President Donald Trump threatened to take back control of the crossing.

The canal authority, an autonomous overseen by the Panamanian government, said in a statement that it had not made any changes to charge fees or rights to cross the canal, adding its statement was directly in response to the US claims.

The US State Department had said earlier in the day that Panama's government had agreed to no longer charge crossing fees for US government vessels, in a move that would save the US millions of dollars a year.

"With total...