MEXICO CITY — Amid one of the worst crises in U.S.-Mexico relations in years, President Trump and President Enrique Peña Nieto spoke by phone Friday morning for about an hour, a conversation that Trump said was "very, very friendly" but one he suggested was a prelude to tough negotiations over what he described as an unfair trade relationship.
"We had a very good call," Trump said in a joint news conference with visiting British Prime Minister Theresa May. "I have been very strong on Mexico. I have great respect for Mexico. I love the Mexican people." But he quickly added that "Mexico has outnegotiated us and beat us to a pulp. They've made us look foolish."
Trump said: "The border is soft and weak. Drugs are pouring in. And I'm not going to let that happen."
He said his talk with Peña Nieto "lasted for about an hour" and that "we are going to be working on a fair relationship, a new relationship."
Although Trump said that "it was a very, very friendly call," he also stressed that "we are going to be renegotiating our trade deals." He said negotiations with Mexico will take place "over the coming months" to ensure that the United States does not "lose" on trade.
Peña Nieto's office said the two leaders had a "constructive and productive conversation" about the bilateral relationship, including the issue about the U.S. trade deficit with Mexico, the importance of "friendship" between the two countries, "and the need of our countries to work together to stop drug trafficking and the flow of illegal weapons."
On the issue of paying for a U.S. border wall that Trump has vowed to build, the Mexican statement said both sides recognized their differences of opinion and that they agreed to "resolve their differences" as part of ongoing discussions about the relationship.
"The presidents also agreed for now not to talk publicly about this controversial issue," the statement said.
A subsequent White House statement echoed the Mexican one, saying that "both presidents recognize their clear and very public differences" on paying for the border wall "but have agreed to work these differences out as part of a comprehensive discussion on all aspects of the bilateral relationship." However, the White House statement stopped short of saying outright that Trump would no longer talk about the payment issue publicly.
Trump has vowed to force Mexico to pay for his border wall, which independent experts have said could cost as much as $25 billion. Trump did not mention the issue in his joint news conference with May.
Peña Nieto on Thursday canceled a planned trip to Washington, after Trump reiterated his insistence that Mexico pay for the wall.
Trump's decision to move forward with building the wall and his threats to dismantle the North American Free Trade Agreement (NAFTA) have opened a serious rift in relations between the two neighbors.
Earlier Friday, Mexican business leaders and politicians warned of economic disaster and possibly unrest if trade ties between the two neighbors are disrupted by new measures proposed by the Trump administration.
Some business executives and officials in Mexico are calling for retaliatory plans.
Mexico's economy was sluggish even before the prospect of a renegotiation of NAFTA, which has led to a large jump in commerce with its largest trading partner. The value of the peso has fallen 13 percent since the election and is plumbing historic lows against the dollar.
Economists have downgraded prospects for economic growth. A rise in gas prices that started earlier this month, part of reforms by Peña Nieto to wean the country off gas subsidies, sparked looting, roadblocks and clashes between protesters and police. If Mexico goes into a recession, as some economists have predicted if a trade war erupts with the United States, this could lead to further violence in a country already on edge.
"We might have unrest," former president Vicente Fox said in an interview this week. "If you have a poor Mexico, yes. If there is hunger, yes. If unemployment comes back to high levels, yes, we will have problems. And the consequences will hit right back on the United States."
Mexico's exporters rely heavily on the United States market. Northern Mexico has transformed in recent years into a robust manufacturing belt that produces automobiles, flat-screen televisions and countless other products.
Major American corporations are as common as cactus in the northern Mexican deserts.
The tensions have left officials on both sides of the border calculating their next moves in a dispute that potentially puts one of the North America's critical economic partnerships in the balance.
Trump appeared to tighten the screws with a combative tweet, while Mexican politicians have rallied around Peña Nieto, who is still deeply unpopular but found himself basking in praise after calling off a meeting with Trump.
Peña Nieto made the decision after Trump suggested he should not come to Washington if Mexico remained unwilling to pay for Trump's planned border wall.
The president of Mexico's national conference of governors, Gov. Graco Ramirez of Morelos, told a Mexican newspaper that Trump had declared "war" on Mexico.
"With Trump, dialogue is exhausted," Ramirez told El Universal. "It doesn't make sense to sit down with him. He doesn't change his attitude or his position."
Foreign Minister Luis Videgaray, who had flown to Washington this week in preparation for Peña Nieto's visit, told a news conference Thursday at the Mexican Embassy that Trump had effectively impugned "the dignity of the Mexican people." Paying for the wall, he said, was "absolutely impossible."
"There are themes that are not part of a negotiation strategy and are totally unacceptable," he said.
Trump seemed unmoved by the outcry from Mexico. On Friday, he tweeted: "Mexico has taken advantage of the U.S. for long enough. Massive trade deficits & little help on the very weak border must change, NOW!"
The growing rift between the two neighbors, who share a 2,000-mile border and half a trillion dollars in annual trade, comes amid a possible renegotiation of the North American Free Trade Agreement, which has been in place for more than two decades.
Mexican business executives and officials noted that a 20 percent tax on imports from Mexico — an idea floated Thursday by White House spokesman Sean Spicer — would make those products more expensive for American consumers. Some expressed exasperation that so much effort must be expended to convince the United States about the benefits of free trade.
"It's paradoxical," Juan Pablo Castañon, the president of Mexico's Business Coordinating Council, a coalition of business groups, said in an interview. "Twenty-five years ago, the United States convinced Mexicans about free trade. Today we're trying to convince Americans about free trade."
Castañon said Mexico should reciprocate on any U.S. tax or tariff. If the United States negotiates with Mexico as a sovereign and respected partner, he said, then both countries can become more competitive and prosperous. If not, then "the first option is not to have NAFTA."