Officials are warning that US consumers will be the worst-hit by a proposed import tax on Mexican businesses trading in the US to help pay for a controversial wall to be built on the border.

What has happened?

The Mexican Foreign Minister has confirmed that President Enrique Pena Nieto has called off a trip to Washington to meet US president Donald Trump.

“The Mexican president directed me to communicate in a courteous and respectful way, to tell the White House it would be impossible for the meeting between the two leaders to happen,” Luis Videgaray said in a statement.

Pena Nieto announced on Twitter that he was scrapping the planned trip.

What has Donald Trump said?

Trump had tweeted earlier that it would be better for the Mexican leader not to come if Mexico could not pay for the wall.

He said later the meeting was cancelled by mutual agreement.

Making Mexico pay

On Thursday, the White House floated the idea of imposing a 20% tax on goods from Mexico to pay for a wall at the southern US border.

Videgaray said the proposed tax would ultimately hurt the US consumer.

“A tax on American imports on Mexican products isn’t a way to get Mexico to pay for a wall. It is the American consumer who would be paying.”

“That’s because here in the United States, (there are) avocados, washing machines, televisions and a number of other products that the American families buy, which would immediately affect the pocket of Americans, affect the economy of the American consumer,” he said.

Businesses would foot the bill

National governments like that of Mexico would not pay the tax directly.

Companies themselves would pay the tax if they import products into the US, potentially increasing prices for American customers.

The idea is unpopular with retailers and businesses that sell imported goods in the US.

It has also met opposition from some lawmakers worried about the impact on US consumers.

US-Mexico trade: Euronews fact check

Last February, Mexican President Enrique Pena Nieto and Obama’s Secretary of Commerce, Penny Pritzker opened a new border crossing from Tornillo in Texas to Guadalupe in Mexico.

The aim was to boost trade between the two countries.

Mexico:

• ships 80% of its exports to the US
• around half of Mexico’s foreign direct investment (FDI) has come from the US over the last two decades
• is the second-largest export market for the US

The United States:

• runs a $58.8 billion dollar trade deficit with Mexico (Euronews)