President Donald Trump said the US will hold off on designating Mexican drug cartels as terrorist organisations despite being ready to do so.
The US leader said all the work had been completed and he was statutorily ready to issue a declaration but had decided to delay, at the request of Mexican President Andres Manuel Lopez Obrador.
The Mexican government had pushed back against Mr Trump's plan, saying such a step by the US could lead to violations of its sovereignty.
"All necessary work has been completed to declare Mexican Cartels terrorist organisations," Mr Trump wrote on Twitter.
"Statutorily we are ready to do so.
"However, at the request of a man who I like and respect, and has worked so well with us, President Andres Manuel Lopez Obrador- we will temporarily hold off on this designation."
Mexico's president thanked him for his decision.
In a speech after Mr Trump's tweet, Lopez Obrador said, "I thank Trump for having put off the decision ... and having chosen understanding and cooperation."
Under pressure from Trump's threat to impose tariffs, Mexico has pressed thousands of national guard troops into service to help block Central American migrants from travelling through Mexico to reach the U.S.
In place of designating the cartels as terrorist outfits, Trump said the U.S. and Mexico instead will "step up our joint efforts to deal decisively with these vicious and every-growing organisations."
