The World Trade Organisation (WTO) on Tuesday gave Mexico the green light to impose $163.23 million in annual tariffs against the United States in retaliation for Washington's discriminating against Mexican tuna imports.
Mexico's economy ministry said that it planned immediate action to initiate the trade sanctions.
"Mexico will immediately seek authorisation ... to suspend benefits, and in parallel, will initiate the internal procedures necessary to make said suspension effective against imports of products from the USA," the ministry said in a statement.
A spokeswoman for the US Trade Representative's office said that the US was disappointed by the WTO's ruling.
"Regrettably, the WTO Arbitrator's decision does not take into account the US' most recent dolphin-safe labelling updates and dramatically overstates the actual level of trade effects on sales of Mexican tuna caught by intentionally chasing and capturing dolphins in nets," she said.
"We will continue to monitor the situation and closely consult with Congress and stakeholders about next steps - US Trade Representative's office
Controversial "dolphin safe" label
The long-running tuna trade feud between the North American neighbours centres on the controversial "dolphin safe" label.
For more than two decades the US has required all tuna imports to be certified "dolphin safe", part of a campaign to save a species that had been decimated by fishing nets.
But Mexico argues that the US applies stricter standards to its exporters to acquire the "dolphin safe" certification than to those from other countries.
A 2015 WTO ruling agreed that the US had inaccurately evaluated the risks to dolphins posed by Mexican tuna fleets.
The Geneva-based WTO, which aims to ensure a level playing field in global trade, cannot force countries to change their trade policies.
But it can authorise retaliatory measures against countries that do not comply with its rulings.
Tuesday's decision follows the US refusal to adjust its labelling of Mexican tuna.
— WTO (@wto) April 25, 2017
Dispute could stretch
The dispute looks set to carry on.
Last year, Washington amended its tuna labelling guidelines, applying the tougher standards applied to Mexico to all importers.
If the WTO ultimately decides that the US is now treating all nations equally, its previous 2015 decision would be quashed.
Further complicating the case is a threat from US President Donald Trump's administration to disregard WTO rulings that hurt the US trade interests.
Trump, who campaigned as a populist claiming that Mexican imports were hurting the US economy, has also called the WTO "a disaster".