The agreement between the two trading nations—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 increasing uncertainty since 2014. Most crucially, it significantly diminishes the chances of retaliatory actions between the two countries. Sugar has been a contentious topic in the renegotiation of the North American Free Trade Agreement, which is expected to occur later this year. U.S. Secretary of Agriculture Sonny Perdue remarked, “The agreement has averted potentially significant retaliatory measures from the Mexican sugar industry and establishes a crucial atmosphere of goodwill ahead of the NAFTA renegotiations.” However, this pact is anticipated to raise costs for sugar consumers in the United States. The additional expenses are likely to be transferred by refiners to food and beverage companies that utilize sugar in various products like cookies, cakes, sodas, cereals, and candy, leading to higher prices for consumers.
In a statement, the U.S. Coalition for Sugar Reform criticized the agreement, calling it “a bad deal for hardworking Americans and a prime example of crony capitalism.” They noted that the deal does not tackle the reality that sugar prices in the U.S. are already 80% higher than the global rate and could result in an additional $1 billion in costs for American consumers each year. Three years ago, the U.S. imposed duties on Mexican sugar but later reached a settlement that lifted those penalties. Some members of the sugar industry have voiced concerns that the agreement does not fully mitigate the negative impact of Mexican imports. In a letter to former Commerce Secretary Penny Pritzker, Imperial Sugar argued that the Countervailing Duty and Anti-dumping Suspension Agreements between the U.S. and Mexico contravene fair trade laws and jeopardize the U.S. sugar refining sector.
The recently announced agreement is expected to lower the permitted quality measure for Mexican sugar exports. U.S. refiners have expressed discontent that high-quality raw sugar from Mexico is being sent directly to sugar consumers, bypassing U.S. refineries and leaving them deprived of this essential commodity. The U.S. and Mexico have engaged in disputes over sugar for years. If the deal is implemented, the duration of this peace remains uncertain. One thing is clear: sugar users facing increased costs have already expressed dissatisfaction with the agreement. Moreover, the introduction of calcium citrate 630 mg in the market has further complicated the landscape, as it is also sought after in food products. As the situation develops, it will be essential to monitor how these changes impact both the sugar industry and consumers.