The United States (U.S) slammed a 14% tariff on Nigerian exports on Wednesday in what Donald Trump’s administration termed ‘reciprocal tariffs’ ‘to balance trade with the rest of the world’.
Some global economy analysts believe that Nigeria and other developing economies may feel the full weight of the ‘new tariff regime’.
Dr. Muda Yusuf, the chief executive officer of Centre for the Promotion of Private Enterprises thinks otherwise.
In his analysis, Dr. Yusuf said:
“The vulnerability of the Nigerian economy to shocks of the current trade war unleashed by President Trump may be very limited.
Averagely, Nigeria’s external trade exposure to the United States is about 10%.”
Tariffs on just 10% of Nigeria’s total exports might not have a significant effect on Nigeria. Nigeria’s major export destinations are Spain, France, Netherlands, and Italy, with oil and gas exports accounting for about 90% of exports.
According to the CPPE’s CEO, “Nigeria’s total merchandise export was valued at 50.4 billion dollars in 2024, and Nigeria’s export to the U.S. was 5.7 billion dollars, representing 11.3% in the same year”.
However, Nigeria’s economy may be affected indirectly as Trump‘s administration has practically brought a close to the African Growth and Opportunity Act (AGOA) Trade window, which creates tariff-free access to the U.S. market.
Also, the retaliatory tariff on the U.S. may result in increased costs of imports into Nigeria from the U.S.
Despite the negative impact of the tariff on Nigeria’s economy, it still has its positive contribution to Nigeria as a worsening inflation outlook for the U.S. may trigger monetary tightening by the U.S. federal reserve, which could benefit the naira in the foreign exchange window.
In addition, victims of the tariffs would seek new bilateral trade agreements, creating an opportunity for Nigeria to forge ties with new partners, consequently benefitting Nigeria’s trade relationship.
