Trump's wall tax suggestion crushes the Mexican peso

The Mexican currency continued a downward slide against the dollar after US President Donald Trump floated an idea how to make Mexico pay for the border wall.

White House Press Secretary Sean Spicer suggested a 20 percent tax on imports from the country, which could help to finance the initiative.

This pushed the Mexican currency down one percent to 21.3 pesos against the greenback. Since the beginning of the year, the peso has plunged nearly three percent against the dollar, and the currency is down over 16 percent since Trump’s election on November 8.

“If you tax that $50 billion at 20 percent of imports - which is, by the way, a practice that 160 other countries do - right now our country's policy is to tax exports and let imports flow freely in, which is ridiculous. By doing it that we can do $10 billion a year and easily pay for the wall just through that mechanism alone,” said Spicer.

Mexican President Enrique Pena Nieto said on Thursday that his country would not pay for any wall, which “divides” the US and Mexico.

Trump tweeted that if Mexico is reluctant to pay for the wall, he will cancel a meeting with Nieto on January 31.

“The US has a $60 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,” the president tweeted. “If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting.”

In response, the Mexican president tweeted in Spanish, that he informed the White House that he would not be attending the meeting.

President Trump is pushing to renegotiate the North American Free Trade Agreement (NAFTA) between the US, Canada and Mexico sealed in 1994 to win better terms for the US.

The Mexican economy is heavily dependent on the US, with 80 percent of its exports shipped to America.