Trump’s next fight with Mexico: Designating drug cartels as terrorists

The move could increase pressure on the cartels by directing more money to intelligence gathering. It could also lay the groundwork for going after cartel financiers and allied businesses—and for unilateral U.S. military action such as drone strikes on drug labs, according to officials and security experts.

But even without direct U.S. intervention, adding cartels to the terrorism list risks straining ties with Mexico, at a time when the two countries are in delicate talks over ending drug smuggling and migration to avoid a trade war. Trump threatened to impose 25% tariffs on Mexico over the weekend but backed down after Mexican President Claudia Sheinbaum struck a deal that would send 10,000 National Guard troops to the border.

The terrorism designation remains a looming issue, though. The Mexican government opposes foreign terrorist organization, or FTO, designations for cartels, with Sheinbaum offering increased cooperation with the U.S. to battle cartels and fentanyl traffic, in the hope that will satisfy Trump. Mexican government lawyers, meanwhile, are conducting a legal analysis of the impact the designations could have, she said.

The designation could disrupt supply chains and financial services on both sides of the border, and expose businesses in Mexico and the U.S. to the risk of hefty penalties and long prison terms for aiding terrorists under U.S. law, experts say.

In the U.S., gun manufacturers and gun shops whose products end up in the hands of cartel gunmen could face legal jeopardy. Banks and other companies that arrange for remittances to be sent from the U.S. to Mexico could also be affected.

That’s because cartels are deeply entwined with the Mexican economy. Many of the tomatoes, bell peppers and cucumbers consumed in the U.S. are grown in the Mexican state of Sinaloa, where many farmers pay the cartel for water for their fields. Businesses such as mining companies and avocado growers are widely believed to pay extortion money to cartels.

“For better or for worse, this will likely force Mexican businesses and the Mexican government to confront pervasive cartel influence," said Andrew Kaufman, an international lawyer who is counseling Mexican and multinational firms on the expected FTO designations.

Trump’s executive order took note of the cartels’ vast reach. The order gives the secretary of state—in consultation with other cabinet members—14 days to determine which Mexican cartels should be designated as FTOs. Then, key members of Congress have seven days to comment before the designation takes legal effect.

The order accuses the Mexican cartels of infiltrating governments and destabilizing countries across the Americas.

“The cartels’ activities threaten the safety of the American people, the security of the United States and the stability of the international order in the Western Hemisphere," it said.

The groups likely to be targeted under Trump’s order include the Sinaloa and Jalisco cartels, security analysts say. They are the leading exporters to the U.S. of fentanyl, which is blamed for nearly 75,000 deaths in 2023, the last full year for which figures are available.

Such a designation would be unusual for a criminal enterprise. Almost all of the more than 60 FTOs currently on the list are Islamist militant groups that operate in the Middle East, Africa and Asia.

Trump considered the move in his first term, in 2019, after nine Americans were ambushed and murdered by cartel gunmen in the Mexican border state of Sonora.

He has told friends that he made a mistake by not doing so and that he considers Mexico a narco-state, and that the prospect of taking U.S. military action against cartels is popular with his base of voters, according to people familiar with the matter.

An FTO designation could result in better and more intelligence gathering, with Defense Department resources giving authorities technology that can track cartel operatives, security experts say.

“Once you designate the cartels as terrorist entities, that opens all kinds of Department of Defense possibilities," said Vanda Felbab-Brown, a security expert at the Brookings Institution.

A designation could also open the door for the U.S. to take “more radical actions to dismantle what it perceived as a growing menace to its security," according to a memo prepared in 2019 by lawyers for the Mexican government, which was viewed by The Wall Street Journal. The memo noted that drone strikes have been used by the U.S. against al Qaeda.

The FTO listing isn’t necessary for the U.S. to take military action in Mexico, analysts say. Trump would most likely seek permission from Congress to use force, and such a resolution was introduced two years ago by then-Rep. Mike Waltz (R., Fla.), who is now Trump’s national security adviser.

But it could change the terms of the debate in the U.S. and Mexico over how to handle the fentanyl trade.

“It’s a political message in view of the fentanyl crisis," said Maria Calderon, an analyst at the Wilson Center’s Mexico Institute, a Washington think tank. “You don’t have automatic faculties to bomb them, but politically you do have leverage to start talking about intervention."

A 2024 survey of members by the American Chamber of Commerce in Mexico found that 12% of companies said organized crime had taken over partial control of the sale and distribution of their products.

“Organized crime is one of the biggest worries and extortion has become the worst crime," the chamber said.

International lawyers point to prior cases where large multinational companies have paid fines after pleading guilty to providing support to terrorist organizations that dominated areas where they operated.

In 2007, banana producer Chiquita Brands International, based in Columbus, Ohio, pleaded guilty to having engaged in transactions with the United Self-Defense Forces of Colombia, or AUC, a right-wing paramilitary group in Colombia and cocaine-trafficking organization that was then on the FTO list. Over six years, Chiquita’s Colombian subsidiary made over 100 payments, in cash and checks labeled “security services," for a total of $1.7 million to the AUC, maintaining that it did so to prevent physical harm to its employees, according to the Justice Department.

Chiquita paid a $25 million fine and started a compliance regime. “Corporations are on notice that they cannot make protection payments to terrorists," said then-Assistant Attorney General Kenneth Wainstein.

The designation could also reshape the security relationship between the U.S. and Mexico.

Sheinbaum has typically supported tackling what she says are the social causes of the country’s violence. But she has cracked down on organized crime since assuming power in October.

In December, Mexican security forces seized a record-breaking 1.3 tons of fentanyl in the state of Sinaloa, where a battle for control of the Sinaloa cartel is under way.

Some polls show a majority of Mexicans would approve U.S. intervention to end cartel violence. And some Mexican officials privately favor a harder line against criminal groups.

But experts say U.S. intervention would do little to stem the drug trade and could increase the violence. And Mexican officials say they wouldn’t accept unilateral action by the U.S. military.

“If special forces do come in, obviously we will engage them," one official said.

Write to José de Córdoba at jose.decordoba@wsj.com