To president neato that the only way we will have that is for mexico to pay for the wall it was impossible for him to go forward. What both sides have done is drawn a line in the sand. A bad move to make between two countries that are physical clea next next to each other and indi visible as a unit. And for understanding a trade we turn to former u. S. Trade representative in the Obama AdministrationMichael Froman. At the moment we are creating a void that china is all too willing to step in to and to film and we see this happening. We saw it happening as you mentioned in daf os. We see it happening across the region where the countries are saying if the u. S. Is not going to engage, show leadership as it did in the context of ttp, then were going to have to line up behind china. We close this evening with richard haass, president on the council of Foreign Relations, his new book a world in disai ra, American Foreign policy and the crieses of the world orld. I think the real alternative to a u. S. Lead world is a nobody lead world. Increasing disarray, countries leak china might have a large role, countries like iran, turkey or israel might have something of a role in the middle east. Russia, germany and europe. So it is a world of local powers but more than anything it is a world of growing disarray or worst yet, also at times a world of chaos. Mexico, trade, tariffs, the wall and Foreign Policy when we continue. Funding for charlie rose is rose funding for charlie rose has been provided by the following and by bloomberg, a provider of multimedia news and Information Services worldwide. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Rose we begin this evening with development in President Trumps order to build a wall between the United States and mexico. Mexican president Enrique Pena Nieto said he would cancel his meeting with trump. Nato his decision comes one trump said at a News Conference this afternoon that it was the United States that was being treated unfairly. The president of mexico and myself have agreed to cancel our planned meeting scheduled for next week. Unless mexico is going to treated United States fairly, with respect, such a meeting would be fruitless and i want to go a different route. We have no choice. Rose trump has also insisted that mexico fund the walls construction. Plans were announced today to impose a 20 tax on all imports into the United States from mention coto cover from mexico to of could the costs of the joining me phil rucker from the Washington Post and carlos pascual, a former u. S. Am bas disor to mexico. Im pleased to have them both here. Phil, just tell me exactly what is it that trump thinks he can accomplish now with this decision by, to end the meeting, all negotiations are over and now he decides will go another course which is to impes a 20 tariff which then i assume mexico will retaliate by imposing a tariff of their own. Yeah, i dont see how and where this ends. But less in listen, trump was outraged by pena neato response when he said no way will mexico pay for this border wall but trump promised the American People mexico will pay, it was the rallying cry at his campaign rallies, he has to find a way to trump the wall. He having the u. S. Taxpayers through the Congress Fund the construction of the wul and get reimbursement from mexico and what the White House PressSecretary Sean Spicer floated today was a 20 3ers tax on any import from mexico, they think that with raise the billions of dollars necessary to fund the wall. What is that number, 10 or 12 or 14 billion . I am not sure what the exact number. Is i dont know that there is a clear estimate of it yet. It is a pretty provocative move by this white house to try to tax goods from mexico. You have to imagine that will trickle down to u. S. Consumers. People buy products from mexico including some of the foods we eat like avocados and so there is a real concern among republicans that this could have some sort of negative impact with consumers in the United States. Rose and at the same time if mexico imposes a tariff on American Goods that may impede them from being sold in mexico and create job losses in the United States, it is argued. Are thats exactly right. Look one of the things i think trump might be missing here is mexico is one of the most important trade partners of the United States, has been for years. It is not some poor des late country, there is a vibrant industry there, a lot of commerce across the border between the u. S. And mexico. The relationship with mexico is of huge concern to the u. S. Business community, the chamber of commerce, some of the major corporations in the United States rely on trade with mexico. So he is really kind of rattling things here. And im not sure how this is going to even out in the weeks to come. Rose carlos, give us the response in mexico, how do they feel about it, how does it sit with them other than theyre not going to pay for the wall in their own words . The mexican people and the Mexican Government have been deeply offended by the way that this has proceeded. During the campaign, candidate trump at that point in time characterized mexicans as criminals and in some cases rapists. Therefore there was a necessity to have a wall to separate mexico and the United States. When you put it in that context you can understand why it was so difficult for mexicans to say that this was show, that they were show going to pay for this wallment and so when President Trump essentially said to president pena nieto the only way well have this meeting is if you agree to pay for the wall, it became politically impossible for him to go forward. And in effect what both sides have done is drawn a line in the sand, a bad move to make between two countries that are physically next to each other and really indi visible as a unit. Rose what will happen if there is a 20 tariff and then there is a countervailing tariff by mexico . I think the answer that phil gave was exactly right. There is going to be a debate about who in fact actually pays that tariff. The United States if you put a 20 tax on gasoline, i think it would be hard pressed to tell a consumer that they were not paying a 20 tax on gasoline. In the end this is going to be borne by American Consumers, american industries. Just even those industries that are giving inputs from the mexican economy and using them in the development of finalized products in the United States t will make those products less competitive. It will have an impact on american jobs and consumer. There will be another debate of rhetoric of what a 20 farrive means. Who is paying for it really. Is it it it the country that is exporting or really the consumers in the other country. Rose now phil, will donald trump be able to argue that the 20 tariff, i will make enough money to build my wall and shut up . He might be able to. And i dont, maybe his supporters are going to want to hear that. But that tariff is going to trickle down to consumers here. And its going to have other ramifications. It is going to complicate the trade relationship that a lot of u. S. Companies have in mexico. Rose how popular is the mexican president with his own people. Hes having a great deal of deficit as a result of corruption issues and Security Issues, pis popular iteratings have gone very, very low. So this makes it a very difficult time actually for him to be able to deal with these issues and the challenges with the United States. I think one of the big things thats going to be important for him is to be able to demonstrate to the mexican people that hes standing up for them, standing up for their rights. The other issue is going to be how to convince the United States that this bilateral relationship is good for the u. S. One of the things that struck me from the time i was ambassador here was industry after industry, american industry, saying if it had not been for the integration of production lines between mexico and the United States, they could not have been competitive in basic manufacturing. They could not have exported to major markets throughout the world. And so a challenge for pena nieto would be to convince the u. S. Side of that persons of the United States at a time when he was in fact suffering in the ratings in his own country. Rose so what kind of contact is taking place. Are they simply shut down or is it what is the conversation today between mexico and the United States . Well, today is the low point. Because essentially both president s decided this meeting wasnt going to happen. And they made that decision on the basis of principle. And the challenge now is to figure out how to find a path to engagement. If you look at two countries next to each other, so intertwined, Third Largest trade partner for the United States so many implications for cultural, political and Security Issues, particularly Security Issues that the United States cant afford to not have a relationship with mexico. And mexico similarly has a particular pan date to find mandate to find a way to engage with the United States because of its economic importance. And so now they have to find a way where theyve made decisionses on principle but show they can come back and have a relationship again. I think a critical factor will be when Rex Tillerson comes in as secretary of state, assuming that he is confirmed, that will create another line of communication and action that will be through more traditional Foreign Policy channels. I think everyone will be looking to Rex Tillerson to make that particular move and outreach to the foreign minister here in mexico to show find a way to reconstruct the relationship. Rose how does his drk dsh how is his standing . Because he is one who i think, you know, made possible the agreement for donald trump to come to mexico during the campaign. How is his standing, hes a close political ally of the president. Secretary he is a controversial person in mexican politics. There are some who feel that he personally is associated with President Trump and resent that. There are others who say well, that may have been the situation but now were in a different type of situation where we have to find a way to have a negotiation to find a better path forward. And we need to use all of the individuals who have influence and who have knowledge. He has a ph. D in economics from mit. Hes schooled on economics and trade issues. He has the ability to pull together a whole range of angers here on the mexican side and has the president s confidence. So from that perspective there are those who are in a smaller political circle who feel that he could potentially be a very useful actor in these negotiations. Rose phil, what is next tomorrow for donald trump . Well, tomorrow he has got theresa may here at the white house. The new Prime Minister of britain and its his first bilateral meeting. I think one thing that is important about what trump has done today with pena nieto and mexico is he is he knows the world is watching. He knows all these other heads of state around the world are watching everything that our president , the u. S. President is doing right now. And hes trying to send a signal that if anybody disunt get along with his plan or betrays him that he will retaliate, which is what he did with mexico. Rose thank you, phil, thank you, carlos. Thank you. Thank you. Rose well be right back. Stay with us. Michael froman is here, he served as president obamas trade representative from 2013 to 2017. In that time he lead negotiations for the transpacific partnership, the largest regional trade accord in history. The tpp was a key component of president obamas so called pivot to asia. It would have eliminated 18,000 tariffs on American Products in nations that together make up 40 of the global economy. On monday President Trump announced the United States would formally withdraw from the deal fulfilling a Major Campaign pledge. Todays heightened tensions with mexican president Enrique Pena Nieto over the much disputed border wall now threatens one of the Worlds Largest bilateral trade reasons. For all thoses reasons im pleased to have Michael Froman back at this table. Welcome. Thank you. Rose i want to get to the tpp, the implications and trade war and all of that. So what happened today is the mexicans say were not going to pay for the wall. The president says hes not going to pay for the wall, he might not come. The president of mexico says were not coming and were not playing for the wall. The president of the United States says well were going to impose a 20 tariff and that will pay for the wall. Help us understand this. Well, it is challenging. Because both under nafta and under our obligations in the World Trade Organization, we cannot impose that 20 tariff and not leave the door open to other companies, other countries to retaliate. So if we do that, were in violating our international obligations, it means that mexico could raise tariffs on our exports. And mexico is our, i believe, second largest export market. We export hundreds of billions of dollars of goods to mexico every year supporting u. S. Jobs, whether it is manufacturing, in agriculture or in services. So its the beginning of a trade tit for tat that will hopefully find its way towards resolution. Rose and what would happen to mexico . Would it then say to the United States, well sell that stuff we were selling to you to china or some other market . Well, companies will have to reorder their marketing. Well have to try and find new markets for their products. But i think the broader is issue is threefold it is the risk of retaliation of mexico raising tariffs on our products. It is the risk of imitation, whether mexico or other countries saying if the. Is can violate its international obligations, we can raise tariffs on American Products as well. And since 95 of the worlds consumers live outside the United States, 80 of the worlds purchasing power is outside of the United States, we need access to those foreign markets to support jobs here. And thirdly, its taxation. Because when you raise tariffs on mexican imports, that means you are imposing a tax on the consumers of those imports. Low income americans spend a disproportionate amount of their market on tradeable goods, clothing, footwear, food. And so you are raising the cost on the people who are least able to afford it. And in that regard it could have pretty broad implications both economicically and in terms of our relations with other countries. Rose take the tpp. Why was ta good for the United States. It was good in many respects. One, by all the economic analyses it would have added more than 130 billion dollars to our gdp. It would have increased imports 350 billion a year. We know that exports. Rose how would it do this. By opening other markets to our exports. We are already a very open market. We have very low tariffs in this country. We dont use regulations as a disguise barrier to trade. But a lot of other countries have much higher barriers. Take autos, we have a 2. 5 tariff on autos. A car comes into the United States, it is a 2. 5 tax slapped on it. Unless it comes in from a free trade country. Vietnam has a 70 tariff on autos. Malaysia has a 30 tariff on autos. Rose so if you sell an auto to vietnam, they put a 70 tax. 70 tax. Tpp would have eliminated that. Would have eliminated the tariffs in malaysia as well as a whole series of nontariff barriers that they have to the market in malaysia. These are some of the Fastest Growing markets in the world, vietnam, 90 million people, growing 6 a year an emerging middle class. They want what america produces. Whether its autos or tractors or high quality Good Nutrition agriculture or our services. So for us to be able to get into that market helps support good jobs back here. You have a market like that, 90 million people, you really have two choices. They have a 70 tariff on autos and you want to sell autos in vietnam, you can either ter down the barrier, keep your production in the United States and export the product from here or close your factory here and move it to vietnam to serve that market. Our view was that