PRESIDENT Trump has asked US Congress to impose a 20 per cent tax on all Mexican goods to pay for the construction of a wall on the border.
White House Press Secretary Sean Spicer told reporters traveling with Trump aboard Air Force One that the move would be part of the beginning of a process of widespread tax reform.
"By doing it we can do $10 billion a year and easily pay for the wall just through that mechanism alone. That's really going to provide the funding," he said.
No further details were given.
Mexico supplies $US21 billion worth of agricultural produce - mostly fruit, vegetables and alcohol - to the US each year. It's also the third largest source of US goods imports.
Such a tax would likely make price rises inevitable.
"We are probably the only major country that doesn't treat imports this way," Spicer said to justify the move. "this gets us in line frankly with the policies that other countries around the world treat our products."
However, the removal of such tariffs has been a major part of international trade development in recent decades.
Mexican President Enrique Peña Nieto has cancelled a meeting with US President Donald Trump that had been set for next week.
Mr Trump jumped on Twitter overnight to demand that his Mexican counterpart should cancel his upcoming visit to Washington if his country refuses to pay for a wall along the border.
"The US has a 60 billion dollar ($80 billion) trade deficit with Mexico. It has been a one-sided deal from the beginning of NAFTA with massive numbers ... of jobs and companies lost. If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting," Mr Trump said on Twitter overnight.
The U.S. has a 60 billion dollar trade deficit with Mexico. It has been a one-sided deal from the beginning of NAFTA with massive numbers...— Donald J. Trump (@realDonaldTrump) January 26, 2017
of jobs and companies lost. If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting.— Donald J. Trump (@realDonaldTrump) January 26, 2017
Mr Pena Neito showed that he has also mastered Twitter, sending out a tweet to alert Mr Trump that he is not longer coming.
"This morning we have informed the White House that I will not attend the meeting scheduled for next Tuesday with the POTUS," Mr Pena Nieto tweeted.
At a press conference after the Mexican President's tweet, Mr Trump said that it would've been "fruitless" for Mr Nieto to come for talks if Mexico is unwilling to pay for the wall.
"The president of Mexico and myself have agreed to cancel our planned meeting scheduled for next week," Mr Trump told Republican politicians at a retreat 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 a different route. I have no choice."
Senate Republican leader Mitch McConnell says Congress is moving ahead with plans for the wall which would cost $US12 billion to $US15 billion ($16 billion to $20 billion).
Senator McConnell and House of Representatives Speaker Paul Ryan did not say how Congress would pay for the wall that Mr Trump has vowed to build.
"We anticipate a supplemental (budget) coming from the administration," Mr Ryan said. "The point is we're going to finance the Secure Fence Act."
The tweet came after Mexican Economy Minister Ildefonso Guajardo said his talks in Washington DC with a key trade adviser to Mr Trump over the future of bilateral commerce had shown the US side was receptive to Mexico's point of view.
Mr Guajardo told Mexican television he had held long talks with Trump trade adviser Peter Navarro on Wednesday on how the two countries should seek to modernise the NAFTA trade agreement sensibly, and how to avoid obstacles to free trade.
The talks had shown the US side was receptive to what Mexico had to say, Mr Guajardo said.
STATE DEPARTMENT QUIT EN MASSE
It came as the entire senior management team of the US State department quit as new Secretary Rex Tillerson takes up his post.
The mass resignation is an embarrassment to Mr Trump, who nominated the ex oil tycoon to the key cabinet position.
Among the four top-level staff to leave is Patrick Kennedy, who was widely tipped to become Tillerson's No. 2 at the department.
Former Exxon Mobil Corp chairman Rex Tillerson was granted to take over the Secretary of State role by the Senate foreign relations committee from Democrat John Kerry last week.
He still has to receive approval from the full Senate, but this is widely expected.
Senior State Department official Patrick Kennedy has quit now Rex Tillerson is set to be in charge. Picture: Getty
Kerry's former chief of staff David Wade told the Washington Post: "It's the single biggest simultaneous departure of institutional memory that anyone can remember, and that's incredibly difficult to replicate".
Among those confirmed to be leaving are Gregory Starr, Assistant Secretary for State for Diplomatic Security, Michele Bond, Assistant Secretary for Consular Affairs and Tom Countryman, the acting undersecretary for arms control and international security.
"These retirements are a big loss. They leave a void. These are very difficult people to replace", Wade told the paper.
TRUMP ISSUES AUSTRALIA DAY MESSAGE
Mr Trump has sent an Australia Day message, declaring America has no better friend than Australia.
The message was delivered by acting Secretary of State Thomas Shannon Jr and comes just days after Trump killed America's participation in the trans-Pacific Partnership with Australia and other allies and as he considers whether to make it harder for Australians and Kiwis to travel to the US.
"On behalf of President Trump and the American people, it is my honour to congratulate the people of Australia as you celebrate this Australia Day, 229 years after the arrival of the First Fleet at Sydney Harbour," Shannon Jr said in a statement.
"It has been over 75 years since your commonwealth and the United States established diplomatic relations, but connections between America and Australia reach back to that fleet." The Los Angeles Times revealed on Wednesday that Trump, in tightening up America's borders, is considering ending the visa waiver program that allows Australians, New Zealanders and citizens of 36 other nations, including many close allies in Europe, to easily visit the US on 90-day tourist visas.