The Mexican Standoff has its origins in Australian slang. According to The New Partridge Dictionary of Slang and Unconventional English, a Mexican Standoff is "a situation in which nobody has clearly has the advantage or emerges a clear winner." According to TV Tropes, this is "regarding perceived political indecision in Mexico."
According to Take Our Word For It, a word-origin webzine, while its source is unknown, adjectives of nationality like Mexican Standoff have derogatory origins. There are other derogatory Mexican sayings to make this case more clear. For example, a Mexican promotion is "a promotion in which the employee gets a new title but no raise in pay," and a Mexican breakfast is "a breakfast consisting of a cigarette and a glass of water."
According to Alan Axelrod, author of "The Real History of the Cold War: A New Look at the Past," the Cold War was a Mexican Standoff. The Soviet Union and the United States both possessed nuclear weapons. Both sides were afraid to fire on each other in fear of retaliation from the other side but were also afraid of being fired upon first, so they kept missiles constantly pointed at the opposing side. This is also known as "mutual assured destruction."
According to Movie Deaths Database, directors use Mexican standoffs because they are a good dramatic device. A Mexican standoffs "gives ample time for dialogue, facial expressions and uncertainty over how the situation will be resolved."
Director Quentin Tarantino is famous for incorporating Mexican Standoffs into his films. Mexican Standoffs appear in the films "Reservoir Dogs," "Kill Bill" and "Inglorious Basterds," as well as the Tarantino-penned "True Romance." In fact, Lt. Aldo Raine, a character in "Inglourious Basterds," says: "You got guns on us. You decide to shoot, we're dead. Up top, they got grenades. They drop them down here, you're dead. That's a Mexican Standoff..."