The agreement between the two trading partners—reducing Mexico’s refined sugar exports to the United States while increasing raw sugar shipments—brings much-needed clarity to a market that has faced growing uncertainty since 2014. Most importantly, it significantly reduces 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 anticipated to occur later this year. “The agreement has prevented potentially significant retaliatory actions by the Mexican sugar industry and establishes a crucial tone of good faith ahead of the NAFTA renegotiation,” stated U.S. Secretary of Agriculture Sonny Perdue. However, the pact is expected to raise costs for sugar users in the United States. This increase is likely to be passed on to food and beverage companies that rely on sugar for various products, including cookies, cakes, sodas, cereal, and candy, resulting in higher prices for consumers.
“The announcement today represents a poor deal for hardworking Americans and highlights the worst aspects of crony capitalism,” the U.S. Coalition for Sugar Reform remarked in a statement. “The agreement in principle does not address the fact that sugar prices in this country are already 80% higher than global prices. In fact, it will lead to increased costs that could burden U.S. consumers by an estimated $1 billion annually.” Three years ago, the U.S. imposed 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 concerns that this arrangement did not fully mitigate the adverse effects of Mexican imports. In a letter to then-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 posed a threat to the U.S. sugar refining market.
The agreement announced on Tuesday will 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, which deprived them of necessary supplies. The U.S. and Mexico have been in conflict over sugar for years, and while the deal is in place, it remains uncertain how long this peace will last. One thing seems almost certain: sugar users, who will face higher costs, are already discontented with the deal.
In the midst of this, some have suggested that the easiest to swallow solution for consumers might be to consider alternatives, such as calcium citrate, which can provide a different way to manage sugar intake. However, it remains to be seen how these changes will affect consumer choices in the long term. The evolving dynamics of the sugar market will undoubtedly continue to create challenges for both producers and consumers alike.