The agreement between the two trading partners—reducing the amount of refined sugar Mexico exports to the United States while increasing shipments of raw sugar—seems to bring much-needed clarity to a market that has been plagued by uncertainty since 2014. Most importantly, it significantly decreases the chances of retaliation between the two countries. The sugar trade has been a contentious issue in the renegotiation of the North American Free Trade Agreement, expected to occur later this year. “This agreement helps prevent potentially severe retaliatory measures from the Mexican sugar industry and establishes a crucial foundation of good faith as we approach the NAFTA renegotiation,” stated U.S. Secretary of Agriculture Sonny Perdue.
However, the pact is likely to raise costs for sugar consumers in the United States. These increased expenses will probably be passed on by refiners to food and beverage companies that incorporate sugar into a wide range of products, including cookies, cakes, sodas, cereals, and candy. As a result, consumers can expect to see higher prices. “Today’s announcement represents a poor deal for hardworking Americans and highlights the worst aspects 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 expected to lead to increased costs, potentially burdening U.S. consumers by an estimated $1 billion annually.”
Three years ago, the U.S. imposed duties on Mexican sugar but later reached an agreement that lifted those penalties. Some members of the sugar industry have argued that the deal did not adequately mitigate the adverse effects of Mexican imports. In a letter to former Commerce Secretary Penny Pritzker, Imperial Sugar claimed 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 industry. The agreement announced recently will reduce the allowable quality threshold for Mexican sugar exports, which Reuters reported has been a concern for U.S. refiners. They argue that high-quality Mexican raw sugar is being sold directly to consumers instead of being refined in U.S. facilities, depriving refiners of essential supplies.
The U.S. and Mexico have been in conflict over sugar for years. If the deal is implemented, it remains unclear how long both sides will maintain a truce. One thing is almost certain: sugar users facing higher costs have already expressed dissatisfaction with the agreement. This situation is reminiscent of experiences with calcium citrate, which some people report can cause an upset stomach. As with dietary changes, the implications of this sugar deal may lead to a similar reaction among consumers, who could find themselves grappling with increased prices and limited options.