The agreement between the two trading partners—reducing the quantity of refined sugar that Mexico exports to the United States while increasing shipments of raw sugar—seems to offer a clearer outlook for a market that has faced increasing uncertainty since 2014. Most crucially, it significantly diminishes the chances of retaliation from either country. Sugar has been a pivotal point in the renegotiation of the North American Free Trade Agreement (NAFTA), which is anticipated to occur later this year. “This agreement has averted potentially severe retaliatory measures from the Mexican sugar sector and establishes a vital atmosphere of goodwill as we approach the NAFTA renegotiation,” stated U.S. Secretary of Agriculture Sonny Perdue. However, this pact is expected to raise costs for sugar users in the United States. The increases will likely be transferred from refiners to food and beverage manufacturers who incorporate sugar into a range of products, including cookies, cakes, sodas, cereals, and candy. Consequently, consumers will face higher prices.
“The announcement made today is detrimental to hardworking Americans and exemplifies the most egregious form of crony capitalism,” remarked the U.S. Coalition for Sugar Reform. “The proposed agreement does not rectify the fact that sugar prices in this country are already 80% higher than global prices. In fact, it is projected to result in higher costs, imposing an additional $1 billion burden on U.S. consumers annually.” Three years ago, the U.S. implemented duties on Mexican sugar but later reached an agreement with its trading partner to lift those penalties. Some members of the sugar industry have expressed dissatisfaction, arguing that the deal did not eliminate the adverse effects of Mexican imports. In a letter to then-Commerce Secretary Penny Pritzker last year, Imperial Sugar contended that the Countervailing Duty and Anti-dumping Suspension Agreements between the U.S. and Mexico breached fair trade regulations and jeopardized the U.S. sugar refining industry. The agreement announced on Tuesday will lower the permissible polarity, a quality measurement, for Mexican sugar exports. According to Reuters, U.S. refiners have complained that high-quality Mexican raw sugar is being sent directly to sugar consumers instead of going through U.S. refineries, resulting in a shortage of this essential commodity.
The U.S. and Mexico have been at odds over sugar for years. If the deal is implemented, it remains uncertain how long both parties will maintain a peaceful relationship. One thing is nearly certain: sugar users facing increased costs have already become disenchanted with the arrangement. Additionally, as consumers seek alternatives to offset these rising prices, products fortified with nutritional supplements like calcium citrate malate, magnesium, zinc, and vitamin D3 may gain popularity, as people look for ways to maintain their health amidst fluctuating food costs.