Florida: President-elect Donald Trump threatened to reassert US control over the Panama Canal, accusing Panama of charging excessive rates to use the Central American passage and drawing a sharp rebuke from Panamanian President Jose Raul Mulino.

Speaking to a crowd of supporters in Arizona on Sunday, Trump also said he would not let the canal fall into the "wrong hands," warning of potential Chinese influence on the passage. 

After the event, he posted an image on Truth Social of an American flag flying over a narrow body of water, with the comment: "Welcome to the United States Canal!"

"Has anyone ever heard of the Panama Canal?" Trump said at AmericaFest, an annual event organized by Turning Point, an allied conservative group. "Because we're being ripped off at the Panama Canal like we're being ripped off everywhere else."

Trump's comments were an exceedingly rare example of a US leader saying he could push a sovereign country to hand over territory. They also underlined an expected shift in US diplomacy under Trump, who has not historically shied away from threatening allies and using bellicose rhetoric when dealing with counterparts.

"It was given to Panama and the people of Panama, but it has provisions," Trump said of the canal, which was once owned by the United States but was handed over to Panama decades ago. 

"If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, then we will demand that the Panama Canal be returned to us, in full, quickly and without question."

In a recorded message released by Panama's President Mulino on Sunday afternoon, the nation's leader said that Panama's independence was non-negotiable and that China had no influence on the canal's administration. He also defended the passage rates Panama charged, saying they were not set "on a whim".

The United States largely built the canal and administered territory surrounding the passage for decades. But the countrues signed a pair of accords in 1977 that paved the way for the canal's return to full Panamanian control. The US handed over control of the passage in 1999 after a period of joint administration.