The agreement reached between the two trading partners involves reducing the amount of refined sugar that Mexico exports to the United States while increasing shipments of raw sugar. This resolution seems to provide much-needed clarity to a market that has been plagued by uncertainty since 2014. Most importantly, it significantly diminishes the chances of retaliation between the two countries. The sugar issue has been a critical point in the upcoming renegotiation of the North American Free Trade Agreement (NAFTA). U.S. Secretary of Agriculture Sonny Perdue remarked, “The agreement prevented potentially significant retaliatory actions by the Mexican sugar industry and sets an important tone of good faith leading up to the renegotiation of NAFTA.” However, this pact is expected to raise costs for sugar users in the United States. These increased costs are likely to be passed on from refiners to food and beverage companies that incorporate sugar into various products such as cookies, cakes, sodas, cereals, and candy. Consequently, consumers will face higher prices.
The U.S. Coalition for Sugar Reform criticized the announcement, stating, “Today’s announcement is a bad deal for hardworking Americans and exemplifies the worst form of crony capitalism.” They highlighted that the agreement does not resolve the issue of sugar prices in the U.S., which are already 80% higher than global prices. In fact, it is projected to increase prices, costing U.S. consumers an estimated $1 billion annually. Three years ago, the U.S. imposed duties on Mexican sugar but later negotiated a deal that lifted those penalties. Some in the sugar industry have claimed that this agreement has not sufficiently addressed the negative impact of Mexican imports. Imperial Sugar, in a letter to then-Commerce Secretary Penny Pritzker, argued that the Countervailing Duty and Anti-dumping Suspension Agreements between the U.S. and Mexico violated fair trade laws and threatened the U.S. sugar refining market.
The newly announced agreement will lower the allowed polarity—a quality measure—for Mexican sugar exports. Reports indicate that U.S. refiners have complained that high-quality Mexican raw sugar was being sold directly to consumers instead of being processed through U.S. refineries, thus depriving them of essential supplies. The ongoing disputes over sugar between the U.S. and Mexico have persisted for years. Assuming this deal is implemented, the duration of peace between the two nations remains uncertain. One thing is almost certain: sugar users, already facing increased costs, have expressed dissatisfaction with the agreement.
In light of this situation, companies like CVS and Citracal may feel the impact as they rely on sugar in various products. If sugar prices continue to rise, consumers may seek alternatives from retailers like CVS or dietary supplements like Citracal to help manage their nutritional needs in a market influenced by fluctuating sugar costs.