One of America’s most important strategic relationships plunged to a new low Thursday when an escalating dispute over a proposed wall on the U.S.-Mexico border prompted Mexican President Enrique Peña Nieto to cancel a planned visit to the White House.
President Trump has been in office barely a week, but his increasingly bitter feud with Mexico over who would pay for the new wall has left Mexican officials furious and now threatens to ignite a trade war between the two crucial allies.
Peña Nieto had been scheduled next week to be one of the first world leaders to meet with Trump. But a day after Trump issued orders to build a new wall along the U.S. border with Mexico, Peña Nieto on Thursday abruptly canceled the Jan. 31 visit.
The Mexican president’s announcement came after Trump warned him on Twitter early Thursday morning to stay home and skip the meeting unless Mexico is willing to fund construction of the wall. Not long after, Peña Nieto announced he would do just that. Mexico, Peña Nieto said, “offers and demands respect.”
Trump had his own, unique version of events.
“The president of Mexico and myself have agreed to cancel our planned meeting scheduled for next week,” he told Republican lawmakers gathered in Philadelphia. “Unless Mexico is going to treat the United States fairly with respect, such a meeting would be fruitless and I want to go in different route. We have no choice.”
Many Mexicans, meanwhile, cheered their president for standing up to the man who regularly demonized Mexico as a source of U.S. problems during the presidential campaign. Analysts said Trump’s move could be the opening salvo in a trade war.
“You cannot trust a man who hates you, who hates all Mexicans,” said Sergio Ramírez, a 28-year-old engineer in Mexico City. “Mexico must prove that we can go on without them. It’s time to shut this man up.”
On Thursday, Trump’s spokesman, Sean Spicer, said the wall could be paid for by imposing a tax on imports. This would include goods such as automobiles and produce from Mexico, where the size of the trade imbalance reached $59 billion in 2015.
Spicer said the tax on Mexico alone was an option that would produce $10 billion a year “and easily pay for the wall just through that mechanism alone.”
Mexico and the United States do half a trillion dollars in trade annually, and a trade war between the two would be extremely costly for consumers on both sides of the Rio Grande.
Trump’s instructions Wednesday on building the wall came as his aides met with senior Mexican officials to prepare for the Peña Nieto visit. To Mexicans, the insult could not have been more clear.
“It was a declaration of war,” said Mexican political analyst Jose Antonio Crespo. “Not a military war, but a diplomatic and economic war.”
For years, dating to the Mexican-American War in the 1840s and even before, Mexico has viewed the United States with suspicion, even hostility. The U.S. seized large swaths of Mexican land, including what is today California, and often threw its weight around in diplomacy, trade and other spheres.
A relationship of true cooperation flourished only after the 1994 North American Free Trade Agreement, and then during the U.S.-friendly government of President Felipe Calderon, who took office in 2006.
“In the 1990s, we were the best amigos,” said Genaro Lozano, professor of political science and international relations at the Iberoamerican University in Mexico City. “We were taught that the future of Mexico belonged in North America and we should consider ourselves partners in this region. That’s all gone. Trump is telling us that Mexico is on its own and we should look somewhere else.”
By alienating Mexico, Trump risks a host of problems. Mexico is one of the United States’ top trading partners, creating a market that employs millions of Americans, and is an indispensable partner in controlling illegal immigration and drug trafficking. Trump’s actions also make it more likely that China will continue to make serious inroads in Latin America, profiting from hungry markets and reaping vast mineral wealth.
Trump blames Mexico for sending legions of undesirable people into the U.S. In fact, several studies show more Mexicans are leaving the U.S. than entering. Moreover, the influx of Central American immigrants, which crested in 2015, has been subdued in large part due to Mexico patrolling its border with Guatemala.
“The only reason we don’t have a crisis at our border is because of what Mexico is doing at its [Southern] border,” said a senior State Department official who spoke on the condition of anonymity during a time of uncertain transition.
The rest of Latin America will look warily at Trump’s treatment of Mexico. Veteran diplomats point to what they see as the progress made in recent years: almost every country in Latin America is ruled by a civilian democracy, not a military dictatorship, and most have a favorable opinion of the United States, in contrast to a past when the U.S. was seen as the hemisphere’s biggest bully.
The diplomats worry, however, that such favorable trends could be reversed under Trump. Nowhere is that more important than in Mexico.
Relative prosperity and stability in Latin America has been predicated in large part on increased integration and free trade. Trump seems intent on rolling that back. He already removed the United States from the Trans-Pacific Partnership treaty, of which Mexico too is a signatory, and has announced renegotiation of NAFTA. Peña Nieto’s visit was meant to be a first step in that process.
NAFTA governs an interlocking web of commerce across Mexico, the U.S. and Canada, and nurtured a sizable middle class in Mexico, a country that was mired in poverty. But efforts to renegotiate the pact will be challenged if Trump and Peña Nieto are not on speaking terms.
Mexico could retaliate by refusing to cooperate on security and immigration issues, opening the floodgate of Central American immigrants or balking at efforts to stop the northward flow of drugs.
Ordinary Mexicans on Thursday were proud of Peña Nieto’s decision to rebuff Trump.
“Trump wants to see us in the hole,” said Eugenio Arvide, 69. “But we will fight. If you want war, we will go to war.”
“It is a shame what is happening. I grew up admiring the United States, looking to them as an example of freedom, rights, and a strong economy,” said Nidia Romero, a 38-year-old graphic designer. “Trump is the worst example of Americans. There are difficult times for Mexico, but don’t forget they also lose without us.”
Albert Sosa Medina, 47, who sells cars, said, "When there are major disasters, we are always united, always helping each other. We are a united people in the face of this misfortune called ‘Trump.’”
The performance of the Mexican peso was not so sanguine. Having already lost more than 10% of its value against the U.S. dollar since Trump’s election in November, it fell further on Thursday.
Trump, in Philadelphia, again reiterated that the American people would not pay for the wall, nor would he allow U.S. taxpayers to lose money in what he called the “defective transaction” that NAFTA represented. His solution for the wall would be tax legislation that would reduce the trade deficit and increase American exports.
That would be part of a larger legislative agenda that Trump said could make the Republican-led Congress the busiest in decades, or “maybe ever.”
In Mexico City, Mario Lara, a 52-year-old merchant, said it’s time for Americans to stand up to Trump. “We’ve had enough of our countrymen being treated badly,” Lara said. “The Americans are aware of everything Mexicans do contribute to their country, and they should put a stop to their president. “
“I want to tell Trump that we are not afraid of him, we know that his country is very strong and powerful, but we Mexicans have dignity and we are not afraid,” Lara said.
Linthicum reported from Mexico City and Wilkinson from Washington. Also contributing were staff writer Michael Memoli in Washington and Cecilia Sanchez of the Mexico City bureau.