The Berlin dispute had simmered ever since Khrushchev threatened (1958) to sign a separate peace treaty with East Germany. This action would seriously threaten the status of West Berlin, as well as Western access to the city.
The Soviets, for their part, were particularly concerned with the growing military strength of West Germany, and, in particular, the installation of tactical nuclear weapons in West Germany. The East German government was increasingly concerned about the defection of East German citizens moving from East to West Berlin.
On June 4, 1961, Khrushchev reissued his 1958 threat in ultimatum form, with a deadline of December 31, 1961. Kennedy responded (June 28, July 25) with a public statement of the US determination to defend the status of Berlin, including Western access rights, but with no mention of freedom of movement between East and West Berlin. This may have encouraged the Soviet and East German governments to begin construction of the Berlin Wall on August 13, 1961. That action produced an immediate heightening of tensions, including shows-of-strength and diplomatic sanctions by both sides.
Nevertheless, the fait accompli removed one of the issues prompting Khrushchev's ultimatum. By the end of August Kennedy proposed negotiations which were arranged for September 21 in New York. Conciliatory letters between Kennedy and Khrushchev were exchanged in late September. When Kennedy assured Khrushchev that the US would not pursue the reunification of Germany, Khrushchev decided (October 17) to rescind the December 31 deadline for a settlement. Tentative agreement on a formula for a negotiated settlement regarding access right and recognition of the boundaries of the two Germanies was reached on November 9th, although it was to take more than a decade before a formal agreement was reached.