Tariffs further exacerbate troubled sugar trade between the US and Mexico

Years of drought in Mexico have already disrupted sugar exports to the United States. Now, tariffs proposed by President Donald Trump risk further straining a once-lucrative trade relationship for America’s top foreign supplier of the commodity, Bloomberg reports.

Trade deals between the two countries were meant to create a reliable flow of affordable sugar to the United States. But the system has broken down, and more imports are now coming from elsewhere. Mexican supplies are expected to fall to a 17-year low in 2025, leaving the Latin American country with less market share than it had hoped.

The U.S. sugar industry is tightly controlled by decades of regulations designed to protect farmers’ profits and prevent other countries from flooding it with sugar. The exception was Mexico, which freely supplied sugar under the U.S.-Mexico-Canada trade agreement until the 2014 agreement set an export cap and floor price. The arrangements made Mexico the largest foreign supplier of sugar to the United States.

But droughts over the past two years have reduced Mexican production, and the United States has needed more sugar than the lower tariffs would allow. Mexican sugar has become so expensive that it has become cheaper for U.S. importers to pay higher taxes to import sugar from countries like Brazil. The potential addition of a 25% tariff on goods covered by the North American Trade Agreement further drives a wedge into the long-standing sugar trade.

The tariffs are set to take effect on April 2, but they are already changing trade. Importers rushed to buy Mexican sugar earlier this year, causing a “frenzy” of shipments, said Oliver Hair, vice president and chief trading officer at Sucro Can Sourcing LLC, a sugar mill operating in the United States and Canada. But now it has “effectively stopped future flows to the United States.”

Tags: USA, Mexico, sugar