US-Mexico tensions rise as Trump aide floats border tax idea

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WASHINGTON: US-Mexican relations have rocked as Donald Trump’s administration suggested taxing imports from the southern neighbour to fund a border wall and Mexico’s president scrapped a meeting with the US leader.
On Friday, Trump kept up his criticism of Mexico, saying it “has taken advantage of the US for long enough,” as a crisis over border security and trade deepened.
“Massive trade deficits & little help on the very weak border must change NOW!” Trump wrote on Twitter.
On Thursday, Mexican President Enrique Pena Nieto scrapped a planned trip to Washington to meet Trump, who has repeatedly demanded that Mexico pay for a wall on the US border to halt illegal immigration.
The White House also suggested on Thursday that the United States could impose a 20 per cent tax on goods from Mexico to pay for the wall, sending the peso tumbling.
Speaking about the scrapped summit, senior Trump aide Kellyanne Conway on Friday told Fox News that “the relationship was not imploded. This one meeting has been cancelled and that was a mutual cancellation.”
In a separate interview on CBS News, she said the tax was one funding possibility and waved off the chance of Mexican retaliation that could cost American jobs, telling CBS News: “They can do what they want.”
“Mexico should pay for that wall because they get an awful lot from this country,” Conway told CBS.
The White House has said its tax proposal is in the early stages.
A plan being weighed by House Republicans would exempt export revenues from taxation but impose a 20 per cent tax on imported goods. The idea, known as a border adjustment tax, would be a significant change from current US policy.
Retailers and other businesses that sell imported goods are not keen on the idea, and some lawmakers have expressed concern about its impact on US consumers.
“The costs for everything from groceries, to cars, to office supplies would go up by 20 (per cent), making it harder for middle class families to pay for things they need every day,” Senate Democratic Leader Chuck Schumer said in a statement.
Trump had been scheduled to receive Pena Nieto at the White House on Tuesday, for their first meeting since the inauguration.
Instead, the Republican president is managing a foreign policy spat with a normally friendly nation and key trade partner during his first week in office.
The escalating war of words over who would pay for the proposed border wall — a central pledge made by Trump during his successful presidential campaign — hit the breaking point on Thursday.
“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 in the morning.
Pena Nieto, who had good relations with former US president Barack Obama, didn’t take long to rise to the challenge.
“We informed the White House this morning that I will not attend the working meeting scheduled for next Tuesday” with Trump in Washington, the Mexican leader responded on Twitter.
“Mexico reiterates its willingness to work with the United States to reach agreements in both nations’ interests.”
Hours later, Trump told Republican lawmakers at a retreat in Philadelphia that the cancellation was by mutual agreement.
“Unless Mexico is going to treat the United States fairly, with respect, such a meeting would be fruitless, and I want to go a different route. I have no choice,” he said.
White House spokesman Sean Spicer said the “lines of communications” would remain open and Washington hoped to “schedule something in the future.”
But in a move that is sure to increase tensions, Spicer later said that Trump could fund the wall’s construction by slapping a 20 per cent tax on goods from Mexico.
“By doing that, we can do $10 billion a year and easily pay for the wall just through that mechanism alone,” he said.
Spicer did not say whether the tax would violate the terms of the North American Free Trade Agreement (NAFTA), which Trump’s administration wants to renegotiate with Canada and Mexico.
Trump signed an order on Wednesday for work to begin on building a wall along the 3,200-kilometre border.
But the US leader has struggled to articulate how the wall will be paid for, though he has suggested recently that the United States would fund it first and Mexico would reimburse the cost later. During the campaign, Trump threatened to tap into remittances that Mexican migrants send home, which last year amounted to $25 billion.
Trump has also ordered officials to scour US government departments and agencies in search of “direct and indirect” aid or assistance to the Mexican government and report back within 30 days.
Republican leaders announced on Thursday they would try to carve out $12-15 billion worth of US taxpayers’ money for the project.
— AFP/Reuters