WASHINGTON: U.S. President Donald Trump’s push to construct a wall on the border with Mexico plunged the two neighbours into a tense standoff on Thursday, even as the White House appeared to back away from its staunch assertion that Mexico must pay to build the barrier.
A spokesman for Trump suggested that a 20-per-cent tax on imports from countries with which the United States runs a trade deficit could cover the cost of the wall.
Such a tax on Mexican imports could “easily pay for the wall just through that mechanism alone,” Sean Spicer, the White House press secretary, told reporters.
“That’s really going to provide the funding.”
However, Trump’s chief of staff, Reince Priebus, later told reporters that the border-tax proposal was just one of a “buffet of options” under consideration by the administration.
Building the barrier and forcing Mexico to pay for it was Trump’s signature pledge during the presidential campaign. Trump believes the wall is necessary to prevent people from entering the United States illegally. Mexico has said it will not pay for such a barrier.
Already Trump has acknowledged that starting construction means that the United States will pay for the costs at the outset, but he vowed that he would recoup them from Mexico later.
On Thursday, Mexican President Enrique Pena Nieto cancelled a meeting with Trump scheduled for next Tuesday in Washington as tensions flared over the costs of building the wall.
A few hours earlier, Trump had appeared to issue an ultimatum, writing on Twitter that if Mexico is “unwilling to pay for the badly needed wall, then it would be better to cancel” the meeting.
Pena Nieto is facing intense political pressure at home to stand up to Trump and his rhetoric while at the same time maintaining good relations with Mexico’s most important trading partner. Trump accused Mexico of sending “rapists” and criminals across the border and has promised to renegotiate the North American free-trade agreement, which he describes as the worst trade deal ever struck.
Trump, who took office last week, signed an executive order on Wednesday for construction of the wall, just as a Mexican delegation led by Foreign Minister Luis Videgaray arrived at the White House for talks with Trump’s aides that will be aimed at healing ties.
The timing of the order and Trump’s reiterated call for Mexico to foot the bill caused outrage in Mexico. Prominent politicians and many on social media saw the signing of the executive order as a deliberate snub to the Mexican government’s efforts to engage with Trump.
Trump asserted that he and Pena Nieto together agreed to cancel their meeting. “Unless Mexico is going to treat the United States fairly, with respect, such a meeting would be fruitless,” Trump told a gathering of Republican members of Congress at a meeting in Philadelphia.
He also reiterated his original position: “I’ve said many times that the American people will not pay for the wall.”
However, the proposal floated by his spokesman, Spicer, amounts to a tax on consumption, which would ultimately be borne by U.S. consumers. (It is also distinct from a different tax mooted by Trump, a 35-per-cent tariff on the goods of U.S. companies moving manufacturing outside the country.)
The proposal resembles a major plank of a corporate-tax overhaul put forward by Republicans in the House of Representatives. That plan includes a “border adjustment” measure that would tax imports while excluding exports. Economists believe that such a measure would also cause the U.S. dollar to strengthen, which would help blunt the impact on consumers of higher import prices.
However, the proposed measure has met with fierce opposition from industries within the United States, including the energy sector and major retailers, which rely heavily on imported goods. Among the companies fighting the measure is Koch Industries, a conglomerate owned by two brothers, Charles and David Koch, both known for bankrolling Republican candidates.
Trump, too, had expressed skepticism about the measure. Earlier this month, he described the border-adjustment idea as “too complicated.” In an interview with The Wall Street Journal, he said, “Any time I hear border adjustment, I don’t love it. Because usually it means we’re going to get adjusted into a bad deal.”