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—aims to clarify a market that has faced increasing uncertainty since 2014. Most importantly, this deal significantly reduces the chances of retaliatory actions between the two countries. Sugar has emerged as a critical topic in the upcoming renegotiation of the North American Free Trade Agreement later this year. “The agreement has prevented potentially significant and retaliatory actions from the Mexican sugar industry and establishes a crucial tone of goodwill as we prepare for the renegotiation of the North American Free Trade Agreement,” stated U.S. Secretary of Agriculture Sonny Perdue.
However, the pact is expected to lead to higher costs for sugar users in the United States. This increase is likely to be transferred by refiners to food and beverage companies that incorporate sugar in a variety of 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 illustrates the worst form 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 27% higher than global prices. In fact, it will result in increased costs, amounting to an estimated $1 billion annually for U.S. consumers.”
The U.S. imposed duties on Mexican sugar three years ago but later reached a deal with its trading partner that lifted those penalties. Some members of the sugar industry have expressed dissatisfaction, claiming it did not sufficiently address the adverse effects of Mexican imports. In a letter to former Commerce Secretary Penny Pritzker last year, 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 is set to lower the permitted polarity, a quality measure, 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 essential supplies.
The U.S. and Mexico have been at odds over sugar for years. If the agreement is enacted, it remains uncertain how long the two sides will maintain a harmonious relationship. One thing is nearly certain: sugar users facing increased costs have already reacted negatively to the deal. Furthermore, the implications for industries reliant on ingredients such as calcium citrate liquid could be substantial, as the rise in sugar prices may affect the overall market dynamics.