President Trump’s tariff policies: Implications for Nigeria’s economy 

The word “tariff” has been floating around in the past couple of months and has become more pronounced since the beginning of April. You might wonder why. The goal of this article is to explain why and what it means for Nigeria’s economy.

Earlier this month, US President Donald Trump rekindled trade hostilities, similar to the Trump 1.0 era, by imposing country-specific reciprocal tariffs on about 60 countries, including a 14% tariff on Nigerian products. The justification was Nigeria’s long-standing import curbs and what Washington described as “imbalanced trade practices.” The strategy prompted sharp criticism, particularly from emerging economies already dealing with inflation and currency instability.

Then, almost as unexpectedly, came the pause. On April 9, the Trump administration issued a 90-day suspension of the tariffs, replacing them with a temporary 10% flat rate for all US trade partners, with the significant exception of China, which now faces up to a severe 245% on imports to the United States following its retaliatory sanctions..

The impact of these pendulum-type decisions has been far-reaching, resulting in trillion-dollar losses across the global financial markets.

For Nigeria, it’s more than just percentages. It is a test of the country’s economic identity and connection with one of its most important global partners.

UNDERSTANDING HOW TARIFFS WORK

At its most basic, a tariff is a charge levied by one country on products imported from another. However, in global economics, things are never so straightforward. Tariffs are powerful instruments for protecting domestic sectors, correcting trade imbalances, and sending political messages. When a government like the United States imposes tariffs, it increases the cost of foreign goods for American customers, discouraging imports and supporting domestic alternatives.

Think of it like this: Imagine you’re a Nigerian textile manufacturer exporting fabrics to the U.S. Your products are competitively priced, and you’ve built a steady customer base. With a 14% tariff, for every ₦100 worth of fabric you export, an additional ₦14 is added as a tax. This increase raises the retail price, potentially making your fabrics less attractive to American consumers and impacting your sales.​

For a country like Nigeria, imposing a 14% tariff would have immediate and chilling effects. Exporters, particularly in non-oil sectors such as cocoa, shea butter, textiles, and cashew nuts, risk rapidly losing pricing competitiveness. Small and medium-sized firms (SMEs), which are already struggling with logistical and financial issues, could be pushed to the brink.

A BRIEF HISTORY OF US – NIGERIA TRADE.

Nigeria’s trade ties with the United States date back decades, with highs and lows influenced mostly by oil prices, US foreign policy, and Nigeria’s fluctuating economic objectives.

– In the early 2000s, Nigerian oil imports to the United States increased dramatically reaching a high of $34.8 billion in 2008.

– The 2008 financial crisis and the subsequent drop in oil prices however resulted in a trade slump, with Nigerian exports to the United States falling to $1.4 billion in 2015.

– Starting in 2016, trade began to recover. By 2024, the United States had imported $5.7 billion in Nigerian goods, primarily crude oil, while exporting $4.2 billion in equipment, wheat, and petroleum products.

– Nigeria maintains a modest but steady trade surplus with the United States, totaling $1.5 billion as of 2024.

Two major frameworks that have shaped this relationshipare:

African Growth and Opportunity Act (AGOA): Enacted in 2000 and set to expire in 2025, AGOA provides eligible Sub-Saharan African countries, including Nigeria, with duty-free access to the U.S. market for certain products.

Trade and Investment Framework Agreement (TIFA):Signed in 2000, TIFA established a platform for dialogue on trade and investment issues between Nigeria and the U.S., aiming to enhance bilateral economic relations.

IMPACTS ON NIGERIA’S ECONOMY

President Trump’s tariff rhetoric is based on the “America First” discourse, which portrays trade imbalances as losses and import restrictions as betrayal. Nigeria, with its 25-category import ban, which includes poultry and medicines, has become an unexpected target.

While the White House perceives protectionism in Abuja, Nigerian policymakers see sovereignty. In a news briefing, Nigeria’s Trade Minister, Dr. Jumoke Oduwole, stated:

“ Over 90% of Nigeria’s exports to the U.S. are oil-related. While oil may seem immune, these tariffs could destabilize our growing non-oil sectors, which are the cornerstone of our diversification agenda.”

Non-Oil Export Setbacks: If tariffs are reinstated, products like cocoa, leather, cashew nuts, and processed foods will become less competitive in the U.S. market thereby exacerbating the country’s non-oil sector forex inflow problem.

Currency Volatility: The naira’s exchange rate against the U.S. dollar has ranged between ₦1,530 and ₦1,638.89 over the past month, reflecting a fluctuation of approximately 7% due to the tariffs and its ripple effects on oil prices. To attenuate the volatility, the Central Bank of Nigeria (CBN) on April 5, 2025, sold approximately $200 million to stabilize the naira.

Diversification Hurdles: A drop in non-oil exports could disrupt Nigeria’s long-term ambition of weaning itself off oil dependency, as mentioned by the trade minister.

Inflation Pressures: Nigeria’s inflation rate stands at 23.18% per the National Bureau of Statistics’ February report. With weaker naira, disrupted trade channels, and global uncertainties, goods and services will become more expensive, raising inflation.

MOVING FORWARD

“These tariffs, though moderate, are warning shots. Nigeria must build resilience by reducing its overdependence on a few markets.” – Dr. Muda Yusuf (Ex-DG, Lagos Chamber of Commerce and Industry)

The 90-day tariff suspension provides a lifeline, but only if it leads somewhere. US authorities have hinted at bilateral renegotiations, including possible AGOA amendments. However, the fundamental tension persists: the global trade system is being rebuilt, and Africa is frequently overlooked in this process.

What Nigeria must do now is strategic, not reactive. This includes:

Indeed, Nigeria is trapped between protecting local industry and preserving access to one of the world’s most powerful marketplaces.

IN CONCLUSION

People actually live the effects of trade policy, even though it is written in spreadsheets and signed in conference rooms. In the upcoming weeks, Nigeria will face the challenge of transforming this disruption into a dialogue and using diplomacy, rather than defensiveness, to negotiate a better agreement.

One thing is certain, regardless of whether Trump’s tariffs are reinstated or removed: Nigeria can no longer afford to be reactive. In the new global trading order, it must take the lead rather than merely adapt.

Abdulazeem Falola, MBA Student at California State University, Los Angeles.