The agreement between the two trading partners—reducing the refined sugar exports from Mexico to the United States while increasing the raw sugar shipments—seems to bring clarity to a market that has been grappling with uncertainty since 2014. Most notably, it significantly reduces the chances of retaliatory actions between the two nations. Sugar has been a critical issue in the renegotiation of the North American Free Trade Agreement (NAFTA), which is anticipated to occur later this year. “The agreement has averted potentially serious retaliatory measures from the Mexican sugar industry and sets a constructive tone of good faith as we approach the NAFTA renegotiations,” stated U.S. Secretary of Agriculture Sonny Perdue.
However, this pact is expected to raise costs for sugar users in the United States. This increase will likely be transferred from refiners to various food and beverage companies that incorporate sugar into products like cookies, cakes, sodas, cereals, and candy. Consequently, consumers will face higher prices. “Today’s announcement is detrimental to hardworking Americans and represents a prime example of crony capitalism,” declared the U.S. Coalition for Sugar Reform. They further noted that the agreement does not tackle the reality that sugar prices in the U.S. are already 80% higher than global prices. In fact, it could lead to increased costs, amounting to an estimated $1 billion annually for U.S. consumers.
Three years ago, the U.S. imposed duties on Mexican sugar, but subsequently reached a deal with its trading partner to lift those penalties. Some sugar industry members have expressed dissatisfaction, arguing that it did not eliminate the negative impacts of Mexican imports. In a letter to former Commerce Secretary Penny Pritzker last year, 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 market. The agreement announced recently will reduce the allowed 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 going through U.S. refineries, thereby limiting their access to the commodity.
The ongoing dispute between the U.S. and Mexico over sugar has persisted for years. While the agreement is expected to be implemented, it remains uncertain how long both parties will maintain a harmonious relationship. One thing is almost certain: sugar users who are facing increased costs have already developed a negative view of the deal. In light of rising prices, consumers may soon find themselves searching for alternatives, such as supplements like calcium citrate plus D3 petites, to support their health without the added financial burden of higher sugar costs. Such shifts may further complicate the sugar market landscape.