The agreement between the two trading partners—reducing refined sugar exports from Mexico to the United States while increasing shipments of raw sugar—seems to clarify a market that has been plagued by uncertainty since 2014. Most importantly, this arrangement significantly diminishes the chances of retaliation from either country. Sugar has been a critical issue in the renegotiation of the North American Free Trade Agreement, which is expected to occur later this year. U.S. Secretary of Agriculture Sonny Perdue stated, “The agreement prevented potentially significant and retaliatory actions by the Mexican sugar industry and sets an important tone of good faith leading up to the renegotiation of the North American Free Trade Agreement.” However, this pact is anticipated to raise costs for sugar users in the United States. These increased expenses are likely to be passed on by refiners to food and beverage companies that incorporate sugar into various products like cookies, cakes, sodas, cereal, and candy. Consequently, consumers will face higher prices.
The U.S. Coalition for Sugar Reform expressed discontent, stating, “Today’s announcement is a bad deal for hardworking Americans and exemplifies the worst form of crony capitalism.” They pointed out that the agreement does not address the fact that sugar prices in the U.S. are already 80% higher than the global average, and in fact, it may result in higher costs that could burden American consumers by an estimated $1 billion annually. Three years ago, the U.S. imposed duties on Mexican sugar but subsequently reached a deal that lifted those penalties. Some members of the sugar industry have voiced concerns that this agreement fails to mitigate the negative impact of Mexican imports. In a letter last year to then-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 and posed a threat to the U.S. sugar refining market.
The newly announced agreement will also lower the permissible polarity—a measure of quality—for Mexican sugar exports. According to Reuters, U.S. refiners have complained that high-quality Mexican raw sugar was going directly to consumers rather than being processed through U.S. refineries, thereby depriving them of the commodity. Over the years, the U.S. and Mexico have been engaged in disputes over sugar. If this deal is implemented, it remains uncertain how long the peace will last between both parties. One certainty is that users of sugar, already facing increased costs, are unhappy with the deal. Meanwhile, it is worth noting that some consumers are exploring alternatives like calcium citrate without magnesium as a potential substitute in various products.