US Sugar Import Duties to Increase after Lobby Win

The United States is set to slap import duties as high as 17 percent on Mexican sugar in a victory for the powerful U.S. sugar industry but a blow to U.S. candy and soft drink makers who face paying more for the sweetener.

Mexican producers urged a deal to end the spat while the government hinted at retaliation, highlighting the potential for Tuesday’s Department of Commerce ruling to increase tensions in a months-long trade dispute over claims cheap subsidized sugar is flooding the heavily protected U.S. market.

The duties mean companies like sweets and food makers Hershey Co, Mondelez International Inc, General Mills Inc and drinks makers such as Coca Cola Co will have to pay up to 5 cents per pound extra for imported Mexican sugar, based on current prices.

 
The United States is a net importer of sugar and Mexico is one of its largest suppliers. Mexican imports are estimated at 2.1 million short tons for the 2013/14 crop year that runs through Sept. 30.

The preliminary decision could still be overturned but is only the first stage of a case which could lead to a further round of levies. It underscores the influence that U.S. cane and beet growers, a relatively small but politically engaged sector in U.S. farming, have over domestic farm and trade policy.

    Out of a total 2.2 million U.S. farms, less than 4,700 grow cane and beet, according to data from the Washington-based Heritage Foundation, a conservative think tank.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza