Mexico's President Andres Manuel Lopez Obrador says his country is "doing our job" to stop the flow of undocumented migrants to US, warns Trump that imposing tariffs would be a lose-lose game.

Mexico's President Andres Manuel Lopez Obrador says,
Mexico's President Andres Manuel Lopez Obrador says, "I tell all Mexicans to have faith, we will overcome this attitude of the US government." (Henry Romero / Reuters)

Mexico's president on Friday urged his US counterpart Donald Trump to back down from threats to impose tariffs on its exports to the United States, in a dispute over migration that could create a major economic shock for Mexico.

Trump said he will introduce punitive tariffs on June 10 if Mexico does not halt the flow of illegal immigration from Central America to the United States, battering Mexican financial assets and hurting stocks worldwide.

The ultimatum from Trump is the biggest foreign policy test to date for Mexican President Andres Manuel Lopez Obrador, who during his six months in power has consistently sought to deflect the US president's barbs and avoid embroiling himself in a confrontation.

"I tell all Mexicans to have faith, we will overcome this attitude of the US government; they will make rectifications because the Mexican people don't deserve to be treated in the way being attempted," Lopez Obrador told reporters at his regular morning news conference.

Challenging Trump's move

The US Chamber of Commerce, an influential business lobbying group, is looking at ways to challenge Trump's move, including legal options, an official with the organisation said on Friday.

Obrador said he believed Trump would understand that tariffs were not the way to resolve the matter, but urged Mexicans to unite around his government to face the challenge.

Trump said on Thursday he would ratchet up tariffs unless Mexico stopped people from illegally crossing into the United States. The plan would impose a five percent tariff on Mexican imports starting on June 10 and increase monthly, up to 25 percent on October 1.

Such a plan would deliver a heavy blow to Mexico's economy, which relies heavily on exports to the United States of goods from avocados and tequila to televisions and cars made by companies such as Ford and Nissan. Mexico sends around 80 percent of its exports to the United States.

Mexico's main stock index fell more than two percent after opening on Friday, and the peso currency was down three percent against the dollar.

Foreign Minister Marcelo Ebrard on Twitter called the treatment of Mexico "unfair" and said it made "no economic sense for anyone."

Not the first trade war

Trump, who is already in a trade war with China, sought to turn up the pressure on Mexico again on Friday.

"Mexico makes a FORTUNE from the US, have for decades, they can easily fix this problem. Time for them to finally do what must be done!" Trump wrote on Twitter.

Trump's trade adviser Peter Navarro said he believed Mexico would respond "very favourably and very quickly."

Ebrard is to travel to Washington to work on convincing the US government that Trump's measures were in neither country's interest, and show that Mexico was making progress containing migration, Lopez Obrador said.

Pledging to exercise "great prudence" in seeking a resolution to the dispute, the Mexican president said he did not want to involve the World Trade Organization for now.

US officials say the immigration system is being overwhelmed by thousands of migrants, many of whom turn themselves over to border officials to claim asylum in the United States. Border facilities are straining to handle large numbers of people and many children.

At least six migrant children have died in US custody or shortly after being released. Apprehensions of migrants on the southwest border hit another record high last month, with 98,977 people arrested.

Source: Reuters