Donald Trump has called for a 20 per cent tax on imports from Mexico to pay for a border wall – as relations between the countries plunged to an all-time low.

In a diplomatic war of words that was fought partly on Twitter, Mexico's president announced he was cancelling a visit to Washington in opposition to Mr Trump’s demand his country pay for the controversial wall.

Mexican leader Enrique Pena Nieto took the decision after Mr Trump tweeted that he should cancel next week’s visit if he was not prepared to foot the bill. “The US has a 60bn dollar trade deficit with Mexico. It has been a one-sided deal from the beginning of NAFTA with massive numbers... of jobs and companies lost,” he wrote.

Mr Trump has said that Mexico will pay for a wall along the US's southern border (AP)

Speaking to a meeting of Republicans in Philadelphia, Mr Trump declared that the two had agreed to put off the meeting. “Without Mexico agreeing to treat the US fairly, such a meeting would have been fruitless,” he said.

He also seemed to suggest that if Mexico was not willing to pay for the wall, he would consider ways to get the money from the US’s neighbour, such as suspending aid or taxing remittances sent from workers in the US. “I want to go a different route,” he said.

The White House left open the door for a possible ending of the stand-off. White House House spokesman Sean Spicer said the United States was keeping open lines of communication with Mexico and looking to reschedule the meeting, which had been planned for next Tuesday.

Donald Trump orders construction of Mexico border wall

However, Mr Spicer also said Mr Trump had proposed a 20 per cent tax on imports from Mexico to pay for the wall.

Mr Trump views the wall, a major promise during his election campaign, as part of a package of measures to curb illegal immigration. Mexico has long insisted it will not pay for such a project.

Mr Trump, who took office last Friday, signed an executive order for construction of the wall on Wednesday, just as a Mexican delegation led by Foreign Minister Luis Videgaray arrived at the White House for talks with Trump aides aimed at healing ties.

Reuters said that the timing of events caused outrage in Mexico, with prominent politicians and many on social media seeing at as a deliberate snub to the government’s effort to engage with Mr Trump.

As a result, Mr Pena Nieto had been under pressure to cancel the meeting, something he did on Thursday morning.

“We have informed the White House that I will not attend the working meeting planned for next Tuesday with @POTUS,” he tweeted.

“Mexico reiterates its willingness to work with the United States to reach agreements that favour both nations.”

Relations between Mr Trump and Mexico have been tense since the New York tycoon declared his was running for the White House in the summer of 2015, declaring that Mexico was sending “rapists and murderers” to the US.