Donald Trump has begun his second term as president by ramping up pressure on Panama – threatening to “take back” the Panama Canal and accusing the country of ceding control of the strategically critical waterway to a US rival: China.

The US said Wednesday that its government vessels would sail for free through the Panama Canal, but authorities at the waterway swiftly issued a denial.

The canal’s two biggest ports are operated by a Hong Kong company with global reach. The Trump administration sees a Chinese threat to U.S. security.

Donald Trump’s new trade war is further blurring the lines between Hong Kong and Beijing, threatening to erode the city’s main selling point as a global financial hub.

Panama is weighing whether to cancel its contract with the Hong Kong-based company that operates ports near the Panama Canal, according to people with knowledge of the situation, a potential concession to defuse President Donald Trump’s threats about countering China’s influence around the key waterway.