Fisher and Paykel Healthcare considers shifting Mexican production to NZ to avoid Trump's tax

New Zealand firm Fisher and Paykel Healthcare has told 1 NEWS it's considering supplying the US market from its New Zealand factory instead of from Tijuana to avoid paying President Donald Trump's threatened tax on Mexican imports.

Mr Trump is insisting that Mexico will pay for construction of the massive wall he has promised along the southern US border and threatens to put a 20 per cent tax on any Mexican imports to the US to pay for it. 

Fisher and Paykel Healthcare has two plants - one in New Zealand and one in Mexico - and says it is considering shifting US supply to the New Zealand factory to avoid paying the tariff. 

"Tariffs are never good," CEO Lewis Gradon told Reuters earlier.

"We've got two plants, one in New Zealand and one in Mexico. We have the capacity to supply the United States from New Zealand if that makes more economic sense," he said.

The Mexican president cancelled his visit to the US after Trump signed an order to begin construction of a border wall. Source: 1 NEWS

The Mexican factory employs 700 people and would stay open and supply other markets.

Fisher and Paykel Healthcare produces devices including masks for treating sleep apnea.

President Trump triggered a diplomatic clash today as the White House proposed the 20 per cent tax on imports from the key US ally.

Mexican President Enrique Pena Nieto abruptly scrapped next week's trip to Washington.

The swift fallout signalled a remarkable souring of relations between Washington and one of its most important international partners just days into the new administration.