The agreement between the two trading nations—reducing the volume of refined sugar Mexico exports to the United States while increasing shipments of raw sugar—seems to bring much-needed clarity to a market that has been plagued by uncertainty since 2014. Most crucially, it considerably diminishes the chances of retaliation from either country. Sugar has been a significant topic in the upcoming renegotiation of the North American Free Trade Agreement, which is expected to occur later this year. “This agreement prevents potentially severe retaliatory measures from the Mexican sugar industry and establishes an important precedent of good faith as we approach the renegotiation of the North American Free Trade Agreement,” stated U.S. Secretary of Agriculture Sonny Perdue.
However, the pact is projected to raise costs for sugar consumers in the United States. These increased costs are likely to be passed on from refiners to food and beverage companies that incorporate sugar in various products, including cookies, cakes, sodas, cereals, and candy. As a result, consumers will face higher prices. “Today’s announcement is detrimental for hardworking Americans and exemplifies the worst form of crony capitalism,” declared the U.S. Coalition for Sugar Reform in a statement. “The agreement does not address the reality that sugar prices in this country are already 80% higher than the global average, and it will likely lead to increased costs of around $1 billion annually for U.S. consumers.”
Three years ago, the U.S. imposed duties on Mexican sugar but later reached a deal that lifted those penalties. Some industry members have expressed concerns that this agreement failed to eliminate the negative impact 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 contravene fair trade laws and jeopardize the U.S. sugar refining sector. The agreement announced on Tuesday will reduce the allowed polarity—a quality measure—for Mexican sugar exports. Reports indicate that U.S. refiners have complained about high-quality Mexican raw sugar going directly to consumers instead of passing through U.S. refineries, thereby depriving them of the necessary commodity.
The U.S. and Mexico have been in conflict over sugar for years. If this deal is implemented, it remains uncertain how long both parties will maintain a harmonious relationship. One thing that is almost certain is that sugar users, who are already facing higher costs, are not pleased with the agreement. Additionally, those who rely on products like Citracal calcium citrate petites with vitamin D may find themselves affected by these rising costs as well. As the situation evolves, the potential implications for consumers and the broader market will continue to unfold.