Yes, USA is definitely a baseball powerhouse but this isn't like basketball where they always beat the other teams. Dominican Republic and Japan's teams are on a similar level to them. Mexico is still a pretty good team themselves too. A similar comparison to this game would be Czech Republic beating Canada in men's ice hockey.
USA honestly hasn't looked too great this tournament so far. They had a closer game against GB than most people expected and they got blown out by Mexico here. They're missing a lot of their best pitchers this tournament and that cost them in this game. Mexico on the other hand, had a great outing from their starting pitcher and that really set the tone for them.
While not likely, there's also a chance that Colombia or Canada could also beat them.