Market News & Headlines >> U.S., Mexico Avoid Sugar/HFCS Tariff Battle

The U.S. and Mexico say they have reached a deal in principle in their sugar trade dispute, which is a relief for the U.S. corn industry, although U.S. sugar producers have not given their approval to the deal. 

The draft agreement, announced by U.S. Commerce Secretary Wilbur Ross and Mexican Economy Minister Ildefonso Guajardo, would allow the two sides to avoid a tariff battle ahead of talks to renegotiate the North American Free Trade Agreement, by averting the imposition of steep U.S. import duties on Mexican sugar and likely Mexican retaliation against imports of American high-fructose corn syrup. 

The U.S. had threatened to impose 80% import duties on Mexican sugar if a deal was not reached by a Monday deadline and Mexico had threatened to respond in kind with duties on U.S. high-fructose corn syrup. Ross extended the U.S. deadline by 24 hours to allow a deal to be completed. 

A main point of the draft agreement is that Mexico agrees to limit exports of refined sugar to the U.S. to 30% of its total exports, compared with the 53% it is currently allowed under a 2014 agreement. 

The agreement addresses the concerns of the U.S. sugar industry and prevents harm to other U.S. industries, including confectioners, beverage producers, and corn growers that might have resulted if no agreement were reached, Ross said. “Unfortunately, despite all of these gains, the U.S. sugar industry has said it is unable to support the new agreement, but we remain hopeful that further progress can be made during the drafting process,” continued Secretary Ross.