Trump made the remark during a news conference on Tuesday at which he also falsely stated that the Panama Canal was being operated by Chinese soldiers.
Panama's Foreign Minister Javier MartÃnez-Acha responded by saying that "the only hands operating the canal are Panamanian and that is how it is going to stay".
The Panama Canal was managed by the US for decades but under a treaty signed by the late US President Jimmy Carter in 1977, it was handed over to the Panamanians on 31 December 1999.
Panama has insisted that its sovereignty over the Panama Canal is "non-negotiable" after US President-elect Donald Trump refused to rule out military force to seize it.
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