There was no negotiation. The west did protest after it was built and the western commanders on the ground made several calls to find out what the Russians were doing. Responses varied from "this is just a military exercise" to "we aren't doing anything. shooting at our soldiers is an act of war". The "wall" went up overnight on August 12 1961. Barbed wire was strung along the dividing line and guard posts set up to shoot anybody attempting to cross the barbed wire. Checkpoints ceased allowing people to cross the border.

I was in Germany when the wall came down. A German man came to speak at our school (US Department of Defense School). His story was that he hadn't seen or spoken to his family in 30 years. He worked on the Western side of Berlin and lived on the Eastern. He went to work one day and when he tried to go home the border was sealed. He went to his employer and they helped him find a place to stay until the event blew over. The soviets closing the border for a day or two or demanding a different work card etc. was apparently fairly common. After a month he determined that the closure was permanent and he started working to get his family legally moved to West Germany. Two months later his family was moved inside East Germany and he wasn't able to contact them anymore.

The concrete wall that became the symbol of a divided Germany was built from 1961-1963. Most of the wall was completed in 1961 but the support buildings towers etc. took longer. Early on some American commanders developed a plan to demolish the wall using armored bulldozers but Kennedy vetoed the plan.

Kennedy's famous "Ich bin ein Berliner!" came during this period as he attempted to reassure West Germany that the lack of a US response to the new wall did not mean that the US had abandoned them. It didn't help much. The sentiment was nice and everybody understood what he meant but he did literally called himself a jelly donut.