Mexico's president, Andres Manuel Lopez Obrador, has urged his US counterpart to back down from a threat to impose punitive tariffs on Mexican imports.
On Friday (May 31) Donald Trump pressured Mexico to stop people from crossing into the United States, one day after threatening to impose new tariffs on Mexican imports in a bid to get the country to crack down on illegal immigration.
Around 80% of Mexico's exports go to the United States. Goods ranging from avocados and tequila to televisions and cars made by companies such as Ford and Nissan.
The country's economy, which shrank in the first quarter, would reel under US tariffs.
Under Trump's plan, a 5% tariff would be imposed on Mexican imports starting on June 10 and increase monthly, up to 25% on October 1.
The ultimatum from Trump is the biggest foreign policy test to date for Obrador and a tall order for Mexican security forces struggling not only to combat migrant flows but also to fight a record level of gang violence and homicide.
A veteran leftist who won a landslide election victory in July 2018, Obrador has consistently sought to deflect the US president's barbs and avoid embroiling himself in a confrontation.
The president prefers to leave diplomacy to foreign minister Marcelo Ebrard, who is to attend talks with US Secretary of State Mike Pompeo in Washington on Wednesday (June 5) to discuss the tariff issue.
Obrador told a regular briefing that Mexico is carrying out its responsibility in immigration policy and stressed the need for diplomacy.
He said he believed Trump would understand that tariffs were not the way to resolve the matter, but has called for Mexicans to unite around his government to face the challenge.
A senior White House official said Trump was particularly concerned that US border agents apprehended a group of 1,036 migrants illegally crossing from Mexico on Wednesday, the largest single group since October.
US officials say the immigration system is being overwhelmed with an average of 4,500 migrants arriving daily, many of whom turn themselves over to border officials to claim asylum in the United States.
Apprehensions of migrants on the southwest border hit another record high last month, with 98,977 people arrested.
Since taking office in December, Lopez Obrador has urged Trump to help him tackle migration by promoting economic development in Guatemala, Honduras and El Salvador, where most of the migrants apprehended on the US border come from.
Global equities tumbled and safe-haven sovereign bonds surged Friday after Trump's unexpected threat added to fears that escalating trade wars will push the United States and other major economies into recession.
The influential US Chamber of Commerce is looking at ways to challenge Trump's tariff move against Mexico, including legal options.
Other industry groups also criticized Trump's threat, saying it would hurt American businesses, farmers and consumers who have already borne the brunt of the US-China trade dispute.
The US-based Beer Institute said most Mexican beer sold in the United States is made from US-grown barley and hops.
"Whether it be the truck driver, farmer, distributor, local retailer or favourite tavern, every community in America will be affected by this decision," said Jim McGreevy, the institute's president and chief executive.