The agreement between the two trading partners—reducing Mexico’s refined sugar exports to the United States while increasing shipments of raw sugar—seems to bring much-needed clarity to a market that has faced growing uncertainty since 2014. Most importantly, it significantly decreases the chances of retaliation between the two nations. Sugar has been a contentious issue during the renegotiation of the North American Free Trade Agreement, which is anticipated to occur later this year. “The agreement has prevented potentially substantial retaliatory measures by the Mexican sugar industry and establishes an important precedent of good faith leading up to the North American Free Trade Agreement renegotiations,” stated U.S. Secretary of Agriculture Sonny Perdue.
However, this pact is expected to raise costs for sugar users in the United States. Refiners are likely to pass these increased costs onto food and beverage companies that incorporate sugar into various products, such as cookies, cakes, sodas, cereals, and candy. Consequently, consumers will bear the burden of higher prices. “Today’s announcement is detrimental to hardworking Americans and represents the worst kind of crony capitalism,” remarked the U.S. Coalition for Sugar Reform. “The agreement in principle fails to address the reality that sugar prices in this country are already 80% higher than global prices. In fact, it is projected to result in an additional $1 billion in costs for U.S. consumers annually.”
Three years ago, the U.S. imposed duties on Mexican sugar but later reached a deal with its trading partner that lifted those penalties. Some members of the sugar industry have voiced concerns that this agreement did not adequately mitigate the impact of Mexican imports. In a letter last year to then-Commerce Secretary Penny Pritzker, Imperial Sugar argued that the Countervailing Duty and Anti-dumping Suspension Agreements between the U.S. and Mexico violated fair trade laws and posed a threat to the U.S. sugar refining market. The agreement announced on Tuesday is set to lower the allowed quality measure for Mexican sugar exports. According to Reuters, U.S. refiners have expressed discontent that high-quality Mexican raw sugar was going directly to consumers rather than being processed through U.S. refineries, thereby depriving them of this essential commodity.
The U.S. and Mexico have been at odds over sugar for years. Should the deal be implemented, it remains uncertain how long both sides will maintain a peaceful relationship. One aspect that is almost certain is that sugar users facing increased costs have already become disillusioned with the agreement. Additionally, there is a growing concern regarding the implications of ferrous calcium citrate and folic acid tablets in the broader context of health and nutrition, which may further complicate consumer attitudes toward rising sugar prices.