U.S. Treasury Secretary Janet Yellen is set to travel to Mexico City this week in an effort to strengthen cooperation between the United States and Mexico in combating illicit finance and the trafficking of fentanyl. The trip, scheduled from Tuesday to Thursday, will include meetings with Mexican President Andres Manuel Lopez Obrador, the country's central bank governor, and the finance minister, among others.

The visit comes on the heels of the announcement of a new "counter-fentanyl strike force" by the Treasury Department. The task force will bring together various resources within the department, including the Office of Terrorism and Financial Intelligence and the Internal Revenue Service's Criminal Investigation unit, to disrupt illicit drug trafficking. The formation of this strike force follows the recent agreement between President Joe Biden and Chinese President Xi Jinping to deepen cooperation in order to stem the flow of fentanyl precursor chemicals from China, which are often mixed by Mexican drug gangs before distribution in the United States. The use of illicit fentanyl and other synthetic opioids has resulted in tens of thousands of overdose deaths annually.

The Treasury Department has been increasingly focused on targeting fentanyl logistics in Mexico through sanctions efforts. While these sanctions have disrupted individual cartels, they have done little to halt the overall cross-border drug trade, estimated to be worth $20 billion to $30 billion annually. Earl Anthony Wayne, a former U.S. ambassador to Mexico, notes that despite the sanctions, the money still manages to find its way back to the cartels.

During her trip, Secretary Yellen will discuss with Mexican counterparts and financial institution executives ways to step up efforts to fight illicit drug finance, including better coordination of investigations. The goal is to be more effective at exposing drug supply chains disguised as legitimate commercial trade and cut off their access to financing. Over the past two years, the Treasury Department has imposed sanctions on more than 250 entities involved in drug trafficking.

In addition to combating illicit finance and drug trafficking, Secretary Yellen will also promote Mexico's role as a premier destination for the “friend-shoring” of U.S. supply chains. This move aims to make supply chains more resilient and promote U.S. national security interests. Mexico has recently surpassed China as the largest U.S. trading partner, and investment between the two countries continues to grow. Secretary Yellen plans to discuss U.S. tax credits for electric vehicles produced in North America and new Treasury rules that could impact Chinese investment in Mexico.

The creation of the "counter-fentanyl strike force" within the Treasury Department marks an important step in the Biden administration's efforts to combat the illegal drug trade. Treasury's ability to track the financial flows that benefit traffickers makes it a key player in these efforts. The department's intensified focus on Mexican cartels and its collaboration with Mexican counterparts is expected to enhance the effectiveness of their actions.

As Secretary Yellen embarks on her trip to Mexico, she will not only address the urgent issues of illicit finance and drug trafficking but also work towards strengthening economic ties between the two countries. Mexico's role in the clean energy supply chain will be a key topic of discussion, as the Biden administration sees Mexico as a vital partner in its “friend-shoring” policy.

Overall, Secretary Yellen's visit to Mexico City represents a significant effort by the United States to combat the illicit drug trade and strengthen cooperation with Mexico in various areas, including finance, security, and trade.