Trump’s Tariff Threatens $10bn US-Nigeria Trade
US President Donald Trump’s recently imposed 14% tariff on Nigerian exports presents a significant risk to the $10 billion annual trade between the United States and Nigeria. The tariff could potentially disrupt key sectors such as oil exports and agriculture, with concerns raised by trade experts and associations about the ramifications of a global trade war.
Economic experts warn that the policy, which raises the prices of goods and services, could weaken living standards, slow down manufacturing activities, hinder international trade, and reduce demand for Nigerian oil in the US, one of its key markets.
In an interview with The PUNCH, Sheriff Balogun, the National President of the Nigerian-American Chamber of Commerce (NACCIMA), pointed out that since the start of the African Growth and Opportunity Act (AGOA) in 2000, Nigeria has exported an estimated $277 billion worth of goods to the US, with crude oil accounting for the majority of exports. Nigeria’s annual exports to the US currently range between $10 billion and $12 billion, though this figure has fluctuated in recent years.
Trump’s announcement of sweeping tariffs, including a new 10% baseline tariff on all imports, marks a shift away from the global free-trade norms that have characterized the post-World War II era. The tariffs are part of a broader strategy aimed at rebalancing global trade, addressing perceived unfair practices, and “supercharging” America’s industrial base, according to Trump’s administration.
The US government justifies the tariffs by citing Nigeria’s 27% tariff on US exports, claiming this disparity has harmed American businesses. The new tariffs are calculated based on the trade deficit and goods imports from affected countries. Trump emphasized that the move is designed to protect American industries and foster fairer trade relationships.
Balogun expressed concern that the policy could jeopardize Nigeria’s trade with the US, particularly in crude oil. Oil remains Nigeria’s dominant export under AGOA, making up nearly all of the country’s trade value with the US under the initiative. Experts predict that Nigeria’s oil revenue could significantly decline as a result of the tariffs, exacerbating economic challenges such as a weaker naira and rising inflation.
The new tariffs also threaten Nigeria’s agricultural exports, including products like cocoa and rubber, while increasing the costs of imports like wheat, refined petroleum, and vehicles. Research from Afreximbank indicates that the tariffs could reduce oil demand, lower foreign exchange earnings, and drive up the cost of goods locally.
In recent months, the US has started importing jet fuel from Nigeria’s Dangote Refinery, with six vessels carrying 1.7 million barrels arriving in April. However, experts like Johnson Chukwu, CEO of Cowry Asset Management, believe that the tariffs will not directly affect Nigeria’s crude oil exports, as energy products, including crude oil, are exempt from the tariffs. The broader concern, however, is that the trade war could lead to reduced global production, which would in turn decrease oil prices and hurt Nigeria’s projected revenue for the year.
The economic impact of the tariff war could lead to rising consumer prices, weaker global economic activity, and a slowdown in manufacturing and international trade. As production slows worldwide, demand for oil will likely decrease, driving down prices and negatively affecting Nigeria’s crude revenue.
Muda Yusuf, CEO of the Centre for Promotion of Private Enterprises, warned that Nigeria may experience inflationary pressures and disruptions in global supply chains. This, he said, could further reduce Nigeria’s foreign reserves and revenues. However, Yusuf also noted that the trade war may create opportunities for Nigeria to form new bilateral trade relationships, potentially attracting investment in the long term.
Sola Obadimu, Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, urged the Nigerian government to focus on domestic economic growth. He emphasized that Nigeria must prioritize industrialization and job creation to safeguard its economy from external shocks.
The US’s new tariff policy extends beyond Nigeria, affecting over 50 countries, including major trade partners like China, the European Union, India, and Japan. The tariffs, which will begin on April 5, include a baseline 10% tariff, with higher rates for various countries starting April 9.
This shift in global trade policy is raising concerns about the potential for a global trade war, and the long-term impact on international markets remains uncertain.
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Trump’s Tariff Threatens $10bn US-Nigeria Trade