The agreement between the two trading partners—reducing the refined sugar Mexico exports to the United States while increasing shipments of raw sugar—seems to bring clarity to a market that has faced growing uncertainty since 2014. Most significantly, it greatly reduces the risk of retaliation between the two countries. Sugar has been a contentious topic in the ongoing renegotiation of the North American Free Trade Agreement, which is anticipated later this year. “The agreement has averted potentially significant retaliatory measures from the Mexican sugar industry and establishes an important tone of good faith as we approach the renegotiation of the North American Free Trade Agreement,” stated U.S. Secretary of Agriculture Sonny Perdue.
However, this pact is likely to raise costs for sugar consumers in the United States. These increased costs will probably be passed on by refiners to food and beverage companies that incorporate sugar into various products, including cookies, cakes, sodas, cereals, and candy, ultimately leading to higher prices for consumers. “Today’s announcement is detrimental to hardworking Americans and epitomizes the worst kind of crony capitalism,” said the U.S. Coalition for Sugar Reform. “The agreement does not address the fact that sugar prices in the U.S. are already 80% higher than global prices. In fact, it will result in increased costs, burdening U.S. consumers with an estimated additional $1 billion annually.”
Three years ago, the U.S. imposed duties on Mexican sugar but later reached an agreement that lifted those penalties. Some within the sugar industry have voiced concerns that this arrangement did not adequately mitigate the impact of Mexican imports. In a letter last year to former 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, jeopardizing the U.S. sugar refining sector. The newly announced agreement will decrease the allowed polarity, a quality measurement, for Mexican sugar exports. According to Reuters, U.S. refiners have complained that high-quality Mexican raw sugar was being sent directly to consumers instead of being processed through U.S. refineries, depriving them of this essential commodity.
The U.S. and Mexico have been at odds over sugar for years. If the agreement is implemented, it remains uncertain how long this newfound peace will last. One outcome seems almost certain: sugar users, facing increased costs, are already dissatisfied with the deal. Meanwhile, those seeking alternatives, such as vitamin shoppe calcium citrate, may find themselves exploring different options due to these rising prices. As the sugar market continues to evolve, the impact on both consumers and the industry will likely be significant, prompting further discussions about trade practices and market fairness.