President-elect Donald Trump threatened to reassert US control over the Panama Canal on Sunday, 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, 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 organised 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”.

China does not control or administer the canal, but a subsidiary of Hong Kong-based CK Hutchison Holdings (0001.HK) has long managed two ports located on the canal’s Caribbean and Pacific entrances.

The United States largely built the canal and administered territory surrounding the passage for decades. But the United States and Panama signed a pair of accords in 1977 that paved the way for the canal’s return to full Panamanian control. The United States handed over 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 belonging (to Panama),” Mulino said in his statement, which was released on X.

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

The waterway, which allows up to 14,000 ships to cross per year, accounts for 2.5% of global seaborne trade and is critical to US imports of autos and commercial goods by container ships from Asia, and for US exports of commodities, including liquefied natural gas.

It is not clear how Trump would seek to regain control over the canal, and he would have no recourse under international law if he decided to make a play for the passage.

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

In recent weeks, he has repeatedly mused about turning Canada into a US state, though it is 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 rebuffed by Danish authorities before any conversations could take place.

Trump repeated the idea on Sunday, in a statement announcing his pick for ambassador to Denmark, Ken Howery, a former ambassador to Sweden.

“For purposes of National Security and Freedom throughout the World, the United States of America feels that the ownership and control of Greenland is an absolute necessity,” he wrote on Truth Social.