Mexico digs in and Trump lashes back as border wall standoff deepens

MEXICO CITY - White House warnings of a possible punitive trade tariff had Mexican business leaders and politicians digging in Friday, with some calling for retaliatory plans of their own amid a deepening crisis with President Donald Trump.

The tensions have left officials on both sides of the border calculating their next moves in a dispute that potentially puts one of the North America's critical economic partnerships in the balance.

Trump appeared to tighten the screws with a combative tweet, while Mexican politicians have rallied around the President Enrique Peña Nieto, who is still deeply unpopular but found himself basking in praise after calling off a meeting with Trump.

Peña Nieto made the decision after Trump said he should not come to Washington if Mexico remained unwilling to pay for Trump's planned border wall.

The president of the Mexico's national conference of governors, Gov. Graco Ramirez of Morelos, told a Mexican newspaper that Trump had declared "war" on Mexico.

"With Trump, dialogue is exhausted," Ramirez told El Universal. "It doesn't make sense to sit down with him. He doesn't change his attitude or his position."

Foreign Minister Luis Videgaray, who had flown to Washington this week in preparation for Peña Nieto's visit, told a news conference at the Mexican embassy on Thursday that Trump had drawn a line that Mexico would not cross, as it threatened "the dignity of the Mexican people." Paying for the wall, he said, was "absolutely impossible."

"There are themes that are not part of a negotiation strategy and are totally unacceptable," he said.

Trump seemed unmoved by the outcry from Mexico. On Friday, he tweeted: "Mexico has taken advantage of the U.S. for long enough. Massive trade deficits & little help on the very weak border must change, NOW!"

The growing rift between the two neighbors, who share a 2,000 mile border and half a trillion dollars in annual trade, comes amid a possible renegotiation of the North American Free Trade Agreement, which has been in place for more than two decades.

Mexican business executives and officials noted that a 20 percent tax on imports from Mexico - an idea floated on Thursday by White House spokesman Sean Spicer - would make those products more expensive for American consumers. Some expressed exasperation that so much effort must be expended to convince the United States about the benefits of free trade.

"It's paradoxical," Juan Pablo Castañon, the president of Mexico's Business Coordinating Council, a coalition of business groups, said in an interview. "Twenty five years ago, the United States convinced Mexicans about free trade. Today we're trying to convince Americans about free trade."

Castañon said that whatever tax or tariff was imposed by the United States should be "mirrored" by Mexican authorities. If the United States negotiates with Mexico as a sovereign and respected partner, he said, then both countries can become more competitive and prosperous. If not, then "the first option is not to have NAFTA."

On Thursday, White House press secretary, Sean Spicer, said the border barrier would be funded by a 20 percent import tax on goods from Mexico.

Spicer did not provide details of how the policy would work. Later, he appeared to backtrack, telling reporters that the tax was "one idea" to pay for the wall and that his intent was not to "roll out" a new policy. He said it could be part of a broader import tax plan backed by some House Republicans.

Critics said that if implemented, such a tax would mean that the wall's cost ultimately would be borne by U.S. consumers.

Trump's moves have rekindled old resentments in Mexico, a country that during its history has often felt bullied and threatened by its wealthier, more powerful neighbor. The legacy of heavy-handed U.S. behavior - which includes invasions in the 19th and 20th centuries and the seizure of significant Mexican lands - has mostly been played down by a generation of Mexican leaders who have pursued pragmatic policies and mutual economic interests with both Republican and Democratic administrations in the United States.

NAFTA has allowed trade between the neighbors to mushroom. Every day, goods valued at $1.4 billion cross the U.S.-Mexico border, and millions of jobs are linked to trade on both sides. Mexico is the world's second-largest customer for American-made products, and 80 percent of Mexican exports - automobiles, flat-screen TVs, avocados - are sold to the United States.

Mexico's economy secretary, Ildefonso Guajardo, said this week that Mexico is prepared to "mirror" any action by the United States to raise tariffs or impose taxes on imports. Guajardo has also said it might be necessary for Mexico to walk away from NAFTA - a once-unthinkable idea - if there was no benefit in the negotiations for his country.

"If we are going to go for something that is less than what we have, it makes no sense to stay," he said.

In his remarks late Thursday aiming to clarify the Trump administration's plans, Spicer said that the wall could be funded by a tax on imports from countries with which the United States has a trade deficit - like Mexico.

"The idea is to show that generating revenue for the wall is not as difficult as some might have suggested. One measure alone could do this," he told reporters.

He said that the tax plan was in the "early stages" and that the actual number, "instead of 20 percent, it could be 18, it could be 5."

Mexicans said they had trouble recalling a time when relations were this bad with the United States or when an American president appeared to be such a threat to Mexico's core interests.

"Never," former President Vicente Fox said in an interview, when asked whether Mexico had faced a comparable U.S. president in his lifetime. "And I never thought the U.S. people would go for a president like this."

"We don't want the ugly American, which Trump represents: that imperial gringo that used to invade our country, that used to send the Marines, that used to put and take away presidents most everywhere in the world," Fox added. "That happened in the 20th century, and this is what this guy is menacing us with."

Trump, for his part, faulted the Mexicans for damaging the relationship.

Addressing a GOP policy retreat in Philadelphia, Trump said Thursday afternoon, "The president of Mexico and myself have agreed to cancel our planned meeting" next Tuesday. "Unless Mexico is going to treat the United States fairly, with respect, such a meeting would be fruitless," he added.