The agreement between the two trading partners—reducing the quantity of refined sugar Mexico exports to the United States while increasing raw shipments of the sweetener—seems to bring much-needed clarity to a market that has faced increasing uncertainty since 2014. Most notably, it significantly reduces the chances of retaliation from either country. Sugar has been a critical issue in the renegotiation of the North American Free Trade Agreement, which is anticipated to occur later this year. “The agreement has prevented potentially significant retaliatory actions by the Mexican sugar industry and sets an important tone of good faith leading up to the renegotiation of the North American Free Trade Agreement,” stated U.S. Secretary of Agriculture Sonny Perdue. However, the pact is expected to raise costs for sugar users in the United States. This increase is likely to be passed on by refiners to food and beverage companies that incorporate sugar in various products such as cookies, cakes, sodas, cereals, and candy. Consequently, consumers will face higher prices.
“The announcement today is detrimental to hardworking Americans and exemplifies the worst kind of crony capitalism,” remarked the U.S. Coalition for Sugar Reform. “The agreement in principle does not address the reality that sugar prices in this country are already 80% higher than the world price. In fact, it will result in increased costs, burdening U.S. consumers by an estimated $1 billion annually.” The U.S. imposed duties on Mexican sugar three years ago but later reached a deal with its trading partner to end those penalties. Some members of the sugar industry have voiced concerns that it failed to eliminate the harm caused by 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 jeopardized the U.S. sugar refining market.
The agreement announced on Tuesday will lower the allowed polarity, a measure of quality, for Mexican sugar exports. According to Reuters, U.S. refiners have complained that high-quality Mexican raw sugar was going directly to sugar consumers instead of being processed through U.S. refineries, which has deprived them of this essential commodity. The U.S. and Mexico have been in conflict over sugar for years. If the deal is implemented, it remains uncertain how long both sides will maintain peace. What is almost certain is that sugar users, facing increased costs, have already expressed dissatisfaction with the agreement.
In the midst of these developments, it is noteworthy that many consumers are turning to alternatives such as calcium citrate with vitamin D to supplement their diets, reflecting a growing trend towards health-conscious choices. This shift may be influenced by rising sugar prices, encouraging individuals to seek other nutritional benefits. As the sugar market continues to evolve, the implications of this agreement and its impact on consumer choices, including the potential increase in demand for calcium citrate with vitamin D, will be closely monitored.