Mexican President Enrique Pena Nieto has cancelled his visit to meet Donald Trump hours after he suggested it should be scrapped if Mexico refuses to pay for a border wall.
White House press secretary Sean Spicer revealed on Thursday night that Mr Trump would force Mexico to pay for the wall by imposing a 20 per cent tax on all imports from the country, a move with the potential to start a trade war between the United States and Mexico.
After talking tough about the wall, he held out an olive branch, saying "Mexico re-affirms its friendship with the people of the United States, and its willingness to reach agreements with its government". "If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting", Trump said on Twitter.
Pena Nieto canceled a planned trip to Washington to talk with Trump about relations between the two countries and talk of a trade war caused the peso to take a dive and gains in the USA stock market to slow down.
The U.S. leader instructed officials to begin to "plan, design and construct a physical wall along the southern border" and - perhaps more problematically - see how it could be funded.
A White House statement said, "With respect to payment for the border wall, both presidents recognize their clear and very public differences of positions on this issue but have agreed to work these differences out as part of a comprehensive discussion on all aspects of the bilateral relationship".
"We have a trade deficit of 60 billion dollars with Mexico, on top of that the border is so often weak, drugs are pouring in and I am not going to let that happen".
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White House Press Secretary Sean Spicer says it's only a proposal to fund the wall, the cost of which is estimated between $12 and $15 billion. The Mexican president said.
But President Enrique Pena Nieto has always insisted that will not happen and on Thursday he pulled out of next week's White House meeting. However Pena Nieto later wrote on Twitter that he opened their conversation telling Trump that Mexico would not pay.
Mexico President Enrique Peña Nieto on Wednesday once again asserted that Mexicans will not pay for President Donald Trump's border wall between the US and Mexico-and Trump responded with a series of aggressive tweets challenging Nieto to cancel an upcoming meeting between the two leaders.
The planned wall was one of Mr Trump's key election campaign pledges.
"We are a proud nation", he said. Trump said in an interview with ABC News on Wednesday evening that Mexico would eventually reimburse the United States for the wall.
U.S. President Donald Trump, watched by (L-R) Vice President Mike Pence, White House Chief of Staff Reince Priebus, head of the White House Trade Council Peter Navarro and senior advisor Jared Kushner, signs an executive order that places a hiring freeze on non-military federal workers in the Oval Office of the White House in Washington January 23, 2017.