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As the United States continues the global trade war with sweeping tariff hikes, Nigeria finds itself grappling with deepening economic uncertainty, caught in a storm it neither started nor is prepared to weather, writes Festus Akanbi

Amidst the surging tide of US tariff hikes and a looming global tariff war, analysts believe Nigeria is in dire straits. The reality is that the Nigerian economy teeters on a fragile edge, buffeted by external shocks, import-dependent vulnerabilities, and a weakening naira.

Today, protectionism tightens its grip worldwide as Nigeria’s access to critical markets narrows, foreign investment hesitates, and inflation threatens to spiral.

Economic analysts, therefore, warned that without swift, strategic shifts towards self-reliance, industrial revival, and export diversification, the nation risks being crushed beneath the weight of global economic realignment.

After initial attempts by the federal government to downplay the severity of the impact of the recent 14 per cent tariff imposed by the United States on Nigerian exports, as well as the ongoing global tariff war, members of the organised private sector last week said there is cause for alarm and that the emerging global economic crisis may worsen the nation’s economic situation.

President Donald Trump’s tariff agenda, characterised by protectionist policies and increased duties on imports, is having far-reaching implications for Nigeria’s trade space and overall economic stability.

As the economy takes the centre stage in geopolitics, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, had assured that the global tariff crisis would have a negligible effect on the Nigerian economy. While recognising the seriousness of escalating global tariff conflicts, Edun emphasised that Nigeria remains relatively insulated from severe impacts, given the exclusion of oil and mineral exports – Nigeria’s primary exports to the US – from the tariff.

But the organised private sector through the Manufacturers Association of Nigeria (MAN) last week underscored the enormity of the challenges posed by the new regime of the US tariff law, saying the 14 per cent tariff imposed by President Donald Trump’s administration on Nigerian exports to the United States of America (USA) would result in a loss of between N1 trillion and N2 trillion in Nigeria’s agricultural exports to the North American country.

The Director General of MAN, Mr. Segun Ajayi-Kadir, while raising the alarm, stated that the reciprocal tariffs could halt Nigeria’s industrialisation journey and transition from exporting raw commodities to semi-processed and finished goods.

The truth is that the hike in tariff could pose a significant disincentive to firms investing in value-added manufacturing in Nigeria and constrain them to revert to exporting raw materials.

Ajayi-Kadir explained, “MAN members who are exporters in agro-processing, chemicals and pharmaceutical, basic metal, iron and steel, non-metallic mineral products, and other light industrial manufacturing rely heavily on the U.S. for market access.”

It is therefore clear that with increased costs for American buyers due to the tariffs, demand for Nigerian products is expected to decline. As pointed out by the MAN DG,  processed agricultural goods such as cocoa derivatives, sesame seeds, and ginger, which have gained modest penetration in US markets, are likely to witness a drop in export volume.

According to the National Bureau of Statistics (NBS), agricultural exports accounted for over N4.42 trillion in 2024, with the US being one of the top destinations. MAN feared that the tariff could potentially wipe out N1 to N2 trillion of that figure annually.

The MAN director-general stated that the imposition of a 14 per cent tariff on Nigerian exports would significantly undermine the competitiveness of locally manufactured goods in the US market.

In what could be described as the confirmation of the fears expressed by MAN, a recent statement by the Minister of Industry, Trade and Investment, Dr. Jumoke Oduwole, warned that the move could significantly impact both oil and non-oil trade flows to one of Nigeria’s key markets.

While providing the federal government’s first official response to the development, which has drawn widespread criticism from the European Union and various exporting countries, Oduwole emphasised that the newly introduced tariffs could undermine the competitiveness of Nigerian products in the US market and disrupt business activities, particularly within the non-oil export sector.

Slump in Crude Oil Prices

Incidentally, the tariff has triggered a slump in global crude oil prices, a development which the Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, blamed on Trump’s inconsistent tariff policies.

He warned that Trump’s reintroduced protectionist trade policies – particularly new tariffs targeting key global economies – were fuelling uncertainty in international oil markets, driving volatility and dampening investors’ confidence.

Ahmed emphasised that the unpredictability surrounding the US government’s economic direction was forcing investors and traders into short-term, high-risk decisions.

The NMDPRA boss said many oil traders were now operating on a “daily strategy,” buying and selling within 24 hours due to fears of sudden policy swings from Washington.

Nigeria Cut in the Crossfire

However, for a country like Nigeria, the impact could be especially brutal. While the policy may be aimed at China and other major exporters, Nigeria is caught in the crossfire. Though not among America’s largest trading partners, Nigeria sends about $10 billion worth of goods to the US annually – 80% of that is crude oil.

Analysts said imports are another area where Nigeria could feel the heat. The country brings in about $ 5 billion worth of goods from the US, including wheat for bread and industrial machinery. Although Trump’s tariff targets exports to the US, analysts said it could provoke retaliation.

They explained that if Nigeria decides to slap its tariffs on American imports, particularly wheat, food prices could spike. A 14% increase in the cost of US wheat, for example, could raise the price of bread by up to 15%. In a country where over 60% of households already struggle to afford regular meals, even a slight increase could deepen food insecurity.

They pointed out that, should tensions escalate, imported items like vehicles, phones, and electronics -already expensive at an exchange rate of N1,600 to the dollar – could see price hikes of 20% to 30%, squeezing consumers and businesses alike.

Then there’s the revenue shock to the Nigerian government. Oil revenues account for about 60% of federal earnings, funding everything from education and healthcare to roads and power.

If Nigeria can’t find alternative buyers quickly, excess supply could push global oil prices down by $1 to $2 per barrel, leading to further losses.

There is also the fear that a loss of $1.4 billion in export revenue would further deplete the country’s dollar reserves, causing the naira to depreciate even more.

Some analysts warn that the currency could slide toward N2,000 to the dollar if nothing is done. That would raise the cost of virtually every imported item -fuel, food, medicine – and worsen the inflation crisis, which already stands at a staggering 34%.

As a way out, experts said one path forward is to deepen trade ties with China and India, which already buy significant volumes of Nigerian crude. Another is to lean into regional trade by leveraging the African Continental Free Trade Area (AfCFTA), opening new markets across the continent.

Nigeria could also take this moment to invest in local production, growing its wheat, reviving domestic manufacturing, and reducing dependence on imports. On the currency front, striking bilateral trade deals that allow transactions in local currencies – with countries like Russia, Brazil, or even India – could help reduce demand for the dollar and ease pressure on the naira.

At the same time, Nigeria has been strengthening its relationships with other economic powerhouses such as China, the European Union, and the United Kingdom. China remains Nigeria’s largest trading partner, with heavy investments in infrastructure and energy. Should the US impose further tariffs on China, Chinese firms may shift their focus toward deeper engagement in Africa, providing Nigeria with new investment opportunities and raising concerns over debt sustainability.

Experts also argued for diversification, which they said is the key to economic resilience. They added that strengthening non-oil sectors such as agriculture, technology, and manufacturing will be crucial in reducing vulnerability to global trade shocks.