In late February, relations between Mexico and the United States seemed to hit a high note. After months of pressure from U.S. President Donald Trump demanding that Mexico do more to battle its cartels, Mexican forces delivered, killing the head of the country’s most powerful organized crime group, the Jalisco New Generation Cartel.

Despite the cartel-inflicted chaos that followed, Mexico received praise from the United States: “This is a great development for Mexico, the US, Latin America, and the world,” Deputy Secretary of State Christopher Landau, a former U.S. ambassador to Mexico, wrote on X. “The good guys are stronger than the bad guys.”

The current U.S. ambassador in Mexico City, Ronald Johnson, noted that “bilateral cooperation has reached unprecedented levels.” Reports that the operation relied on U.S. intelligence seemed to represent what Mexican President Claudia Sheinbaum has called “cooperation without subordination.”

Since then, however, bilateral relations have rapidly unraveled. Washington’s increasing hawkishness over security and corruption south of the border has pushed U.S.-Mexico ties to a boiling point, just ahead of talks over the future of the United States-Mexico-Canada Agreement (USMCA). The process formally began on May 28, with the United States opting for bilateral talks with Mexico first.

The future of trade between the countries has never seemed more tenuous, and depending on the outcome of the talks, U.S.-Mexico relations could be derailed for years to come.

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The rift began to widen last month, when reports emerged that two CIA agents were killed in a car accident during an operation to take down a drug lab in the Mexican state of Chihuahua. Sheinbaum’s government claimed to have no knowledge of the agents’ presence in Mexico—a potential violation of sovereignty and the Mexican Constitution.

The CIA operation also set off alarm bells given Trump’s threats to send ground troops into Mexico. “This is not something that should be taken lightly by any Mexican,” Sheinbaum said at a news conference.

Sheinbaum has spent much of the past year keeping a cool head and trying to appease Trump, from halting oil shipments to Cuba to sending nearly 100 cartel members to face justice in the United States. But she has drawn a clear red line when it comes to direct involvement of U.S. troops on Mexican soil.

“There’s a real duel between the presidents of Mexico and the United States, a challenge that’s been brewing for months,” said Rafael Fernández de Castro, the director of the Center for U.S.-Mexican Studies at the University of California, San Diego. “This is without a doubt the most difficult year in many decades in terms of the bilateral relationship.”

Days after the CIA accident, Johnson gave a provocative speech at a factory groundbreaking in the state of Sinaloa, hinting that the Trump administration’s next target in Mexico would be government corruption. Trump has long railed against the “intolerable alliance” between Mexican officials and the cartels, saying that cartels have a “tremendous grip” on politicians.

Citing Mexico’s corruption as a threat to international investment and the USMCA, during his speech in Sinaloa, Johnson called on the country “to criminalize bribery and corruption and enforce codes of conduct for public officials.” He added, “We may soon see significant action on this front. So, stay tuned.”

On April 29, Washington made good on its threat. The U.S. Justice Department charged the governor of Sinaloa, Rubén Rocha Moya, and nine other current and former officials on allegations of working with the Sinaloa cartel to distribute massive amounts of fentanyl, heroin, cocaine, and methamphetamine to the United States.

The U.S. charges and extradition request landed like a bomb in Mexico. Rocha Moya is a member of Mexico’s governing Morena party, was a close ally of former President Andrés Manuel López Obrador, and was publicly backed by Sheinbaum.

“There’s no doubt that there’s a before and after the extradition request,” Fernández de Castro said. “It was unprecedented. This really strained the bilateral relationship.”

Sheinbaum was evidently caught off guard, demanding more evidence before considering extradition. There was no sign that the president had any intention of investigating Rocha Moya before the U.S. charges. “We will not cover up for anyone who has committed a crime,” Sheinbaum said. “However, if there is no clear evidence, it is evident that the objective of these charges by the Department of Justice is political.”

The charges against Rocha Moya put Sheinbaum in an impossible bind. She must make efforts to appease the United States if Mexico wants a chance at emerging from the trade talks with a good deal. At the same time, she needs to mollify the anti-American fervor within the Morena party, which won’t take Rocha Moya’s extradition lightly. Even with the USMCA on the table, Morena hard-liners will push for the Sinaloa governor to stay in Mexico.

Given the sluggishness of Mexico’s economy and its dependence on the U.S. market, it’s likely that Sheinbaum will eventually hand over Rocha Moya to mollify Trump.

The extradition request proved to be just the beginning. CNN reported this month that the CIA had expanded its presence in Mexico and was involved in the assassination of a cartel member in March. (Sheinbaum called the report a “fiction the size of the universe.” A CIA spokesperson also denied it.) Days later, the New York Timesreported that the U.S. Justice Department was pushing to increase indictments of “corrupt Mexican officials” under terrorism statutes.

On May 15, reports emerged that two indicted officials from Rocha Moya’s administration had turned themselves in to U.S. authorities, lending even greater credibility to Washington’s accusations and ramping up the pressure on Sheinbaum to turn over more officials.

“It’s building up to a crescendo,” said Arturo Sarukhan, a former Mexican ambassador to the United States. “We may be left in the worst of worlds: a relationship that collapses at a tactical level and the perception in Washington that the Mexican government is in fact protecting and Teflon-coating links between politics, politicians, and transnational criminal organizations.”

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With the USMCA review now underway, the collapse of the bilateral relationship could not have come at a worse time. For Mexico, the stakes are tremendous.

“It’s urgent and of utmost necessity for Mexico to preserve the agreement,” Fernández de Castro said. “Thanks to the USMCA, Mexico is now the United States’ number one trading partner. And Mexico is also one of the countries in the world with the lowest tariffs in the era of Trump 2.0.”

Trade with the United States alone represents more than 80 percent of Mexican exports. In these negotiations, Mexico will want to keep the USMCA as stable as possible while protecting energy sovereignty and limiting the use of tariffs for nontrade issues such as migration or security.

Under USMCA rules, the three countries must decide by July 1 whether to extend the agreement for another 16 years. If not, the agreement will remain in force but undergo annual review until 2036, when it could expire. Countries may also withdraw from the agreement altogether, which would have dire consequences for North America.

Trump has also irked Canada with threats including annexation, blocking a new bridge between Michigan and Ontario, and imposing a 100 percent tariff should Canada make a trade deal with China. Ottawa may now be looking for trade deals elsewhere. During the USMCA review, Canada will likely aim to resolve disputes on issues such as forestry and look for the United States to remove tariffs on steel and aluminum. The Office of the U.S. Trade Representative has not yet announced a schedule for formal negotiations with Canada.

Given the strained relationships between the United States and its contiguous neighbors, analysts say that it is unlikely that all three countries will agree to extend the deal. Though Trump has flirted with exiting the USMCA altogether, an annual review process is the most likely outcome.

That is particularly bad news for Mexico. “That means that at least for the next three years, the U.S. administration will have a very important leverage point against the Mexican government,” Sarukhan said, because USMCA talks and tariff negotiations “are inextricably linked, from Washington’s view, on the level of collaboration by Mexico in law enforcement and counter-drug matters.”

Mexico does have at least one important card to play. With the U.S. midterm elections looming, smooth trade negotiations will ensure stable prices for many goods that affect voters’ pocketbooks, from avocados to auto parts. It is a key factor for affordability, the “most important word” in the midterms, Fernández de Castro said. “That is something that all the companies in the United States that have interests in Mexico understand—even if Trump does not.”

According to Fernández de Castro, these companies might lobby Trump to ensure a good deal. “Those American companies with interests in Mexico saved NAFTA in 2018, and I’m sure they’re going to save the USMCA,” he added.

Still, defeating drug cartels remains Trump’s guiding principle in the relationship with Mexico. No matter what happens with the trade agreement, there is little doubt that the United States will continue exerting pressure on Sheinbaum over collusion between members of her party and drug trafficking groups.

“There’s a pipeline of more indictments coming our way,” Sarukhan said. “The time for threats is over, and the rubber is now hitting the road.”