Mexican cartels as foreign terrorist organizations: Impact on US businesses
On inauguration day, President Trump wasted little time exercising his authority on a range of foreign policy issues. Among the plethora of actions issued just that day, he signed an executive order (EO), “Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists.” This EO directs the secretary of state, in consultation with the secretaries of the Treasury and Homeland Security, the attorney general, and the director of national intelligence—some of whom have not yet been confirmed by the Senate—to make a recommendation regarding the Foreign Terrorist Organization (FTO) and/or Specially Designated Global Terrorist designation of any cartel or other organization under this umbrella within fourteen days. The EO also directs the attorney general and secretary of Homeland Security to take steps as necessary to expedite the removal of those who may be designated pursuant to this EO.
Should the Trump administration choose to use the FTO designation on major Mexican cartels, it may have impacts that have not been fully evaluated. For example, US companies operating in Mexico will need to determine whether their operations may provide “material support or resources” to the cartels—a broadly defined criterion that substantially expands the scope of penalties for violations. Similarly, insurance companies providing services to those US businesses with a presence in Mexico may reconsider their premiums—and whether they wish to further provide services at all. Mexican asylees could assert they are fleeing terrorism if they feel threatened by the cartels. Absent clear guidance from the Trump administration, financial institutions may also be put in a bind as they seek to evaluate whether financial activity involving Mexico may run afoul of the material support clause. The breadth of what may be encompassed under material support, from lodging, to guns, to “expert advice or assistance” renders compliance challenging, particularly as there’s no blacklist or other mechanism against which US companies may screen to evaluate if their funds or services involve cartel members. As such, the reverberations from an FTO designation of major Mexican cartels may be broader than intended.
While the notion of using the FTO authority to designate cartels has been explored previously—by both the executive and legislative branches—prior considerations have not resulted in action pursuant to the FTO authority due to the anticipated knock-on impacts. Instead, for example, the Biden administration issued EO 14059, “Imposing Sanctions on Foreign Persons Involved in the Global Illicit Drug Trade,” which has been used to impose sanctions on over four hundred individuals and entities involved in the global illicit drug trade. Relying on this sanctions authority and other financial, health, and enforcement tools may have contributed to the decrease in fentanyl and other opioid-related overdoses and deaths.
Countering the international drug trade is a goal with which the Trump and Biden administrations seemingly align, though their methods of pursuing this objective clearly differ. Given the scope of the problem and the impact illicit drugs have on American communities, creative approaches are certainly warranted. However, new strategies—and their broader impacts—should be thoroughly evaluated prior to deployment.
Samantha Sultoon is a nonresident senior fellow with the Atlantic Council’s Economic Statecraft Initiative.

Economic Statecraft Initiative
Housed within the GeoEconomics Center, the Economic Statecraft Initiative (ESI) publishes leading-edge research and analysis on sanctions and the use of economic power to achieve foreign policy objectives and protect national security interests.
Image: Representation of an illegal drug warehouse