The US will legally designate Mexican drug cartels as terrorist groups, President Donald Trump says.
The move would enable a wider scope of US action. Mr Trump also said he had told Mexico the US was ready to "go in and clear out" the cartels.
In response Mexico's foreign minister said his country would not allow any "violation of national sovereignty".
Earlier this month Mr Trump vowed to "wage war on the drug cartels" after a deadly attack on US citizens in Mexico.
The victims - three women and six children who were Mormons of dual US-Mexican nationality - were killed in an ambush while travelling through a remote area of northern Mexico on 4 November.
Officials said it may have been a case of mistaken identity, but relatives of the victims said the killers must have known whom they were targeting.
After the attack the victims' community, the LeBarons, petitioned the White House to list the cartels as terror groups, saying: "They are terrorists and it's time to acknowledge it."
Conservative media figure Bill O'Reilly asked President Trump on Tuesday whether he was going to designate the cartels as terror groups and "start hitting them with drones".
The president said: "They will be designated... I have been working on that for the last 90 days. You know, designation is not that easy, you have to go through a process, and we are well into that process."
He added that he had told Mexican President Andrés Manuel López Obrador that the US was willing to launch operations against the cartels inside Mexico.
"I've already offered him to let us go in and clean it out and he so far has rejected the offer but at some point something has to be done," Mr Trump said.
When a group is designated as a terrorist organisation in the US, it becomes illegal for people in the US to knowingly offer support.
Its members are also banned from entering the US. If they are already in the US, they face being deported.