Tensions have flared between China and Panama following a recent decision by Panama’s Supreme Court. The Chinese government has issued a strong condemnation of the ruling, cautioning that Panama could face severe consequences unless it reconsiders its stance.

This diplomatic rift arose after the Panamanian court nullified the operational license of Hong Kong-based CK Hutchison, which manages ports on both sides of the Panama Canal. The decision has been hailed as a significant win for the Trump administration, which has been keen on curtailing Chinese influence over this strategically vital waterway in the Western Hemisphere.

In response, the Hong Kong and Macao Affairs Office of the State Council took to WeChat on Tuesday, criticizing the court’s decision as “logically flawed” and “utterly ridiculous.” Both the Chinese central government and the Hong Kong Special Administrative Region government have expressed their opposition to the ruling.

In a commentary posted on Tuesday on its WeChat account, the Hong Kong and Macao Affairs Office of the State Council said the “logically flawed” and “utterly ridiculous” ruling was opposed by the Chinese government and the Hong Kong Special Administrative Region government.

“The Panamanian authorities should recognize the situation and correct their course,” the Hong Kong and Macao Affairs Office said, according to a Google translation.

“If they persist in their own way and remain obstinate, they will inevitably pay a heavy price in terms of politics and economics!”

In a brief statement on Jan. 29, Panama’s top court said the terms under which Panama Ports Company (PPC), a subsidiary of CK Hutchison, runs the port of Balboa on the Pacific Coast and Cristóbal on the Atlantic side of the Panama Canal violated its constitution.

The ruling came around a year after U.S. President Donald Trump threatened to seize control of the Panama Canal, saying the waterway was “vital to our country” and claiming, “it’s being operated by China.”

The comments from the Hong Kong and Macao Affairs Office reflect an escalation in tone from China’s initial response to the ruling.

A spokesperson for China’s Ministry of Foreign Affairs said on Friday that the decision was “contrary to the laws governing Panama’s approval of the relevant franchises, and that the companies will reserve all rights, including legal proceedings.”

Beijing said it would take all necessary measures to safeguard the legitimate rights and interests of Chinese companies.

PPC, which has held the contract to operate the ports of Balboa and Cristóbal since the 1990s, also said that the decision was inconsistent with the relevant legal framework.

CK Hutchison, for its part, said on Wednesday that it had launched international arbitration proceedings against Panama after the country annulled its licenses to operate two Panama Canal ports.

In a statement, the company said PPC would seek “extensive damages” over the ruling, without specifying the damages sought.

Shares of CK Hutchison were up over 2% on Wednesday. The stock has climbed more than 23% so far this year.