Experts have assured Nigeria to worry less about the American President, Donald Trump’s new tariff policy, as the action is likely not going to have a significant impact on the country’s economy.
An analytic document released by the Renaissance Capital Africa urged Nigerians to stay calm, estimating that the policy could only impact less than 0.1 per cent of the nation’s Gross Domestic Product (GDP).
Also, the Centre for the Promotion of Private Enterprise (CPPE) stated the current tariff war would have limited impact on Nigeria’s economy. President Donald Trump of the United States had announced a major trade policy shift, imposing a 10 per cent baseline tariff on all imports and introducing country-specific reciprocal tariffs.
Under this new policy, Nigerian exports to the U.S. will now attract a 14 per cent tariff, in response to what the U.S. government claims is a 27 per cent duty imposed by Nigeria on American goods.
Between 2015 and 2024, Nigeria’s total trade with the U.S. amounted to N31.1 trillion, with imports accounting for N16.4 trillion (8.7 per cent) of Nigeria’s global exports, according to data from the National Bureau of Statistics (NBS).
Renaissance Capital’s analytic document obtained by The Guardian, said Nigeria’s major export to U.S is oil, which “could be diverted to any other country.”
For other African countries, it stated there was no need to worry because the level of trade is low, unlike what obtains with South Africa, Nigeria, Algeria and Angola.
It stated: “Does it really matter to an oil exporter if the U.S. imposes tariffs? Not much. Exporters can divert their oil to any other country. The same will be true of most commodities.
“The US does not trade much with Africa. It imported $39 billion of goods in 2024, which is roughly what it imports from Mexico or Canada in just over a month. The US imports more in 24 hours from either of them (over $1 billion a day), than it imports in a year from about 40 African countries. The biggest exceptions are South Africa, and to some extent Nigeria, which account for over half of everything the U.S. imports from the continent.
“For Nigeria, the impact would cut 0.1 per cent of GDP. But this is surely an exaggeration, because Nigerian oil can be sold elsewhere.
“Nonetheless, some small indirect impact on Africa is likely to come from Trump’s tariffs. Global trade is likely to be hit, cutting demand for energy, and pushing oil prices down. Even here, we should be cautious,” it stated.
It remained optimistic that the policy might help global trade in the long run. “In the end, tariff threats today may lower global tariffs, and therefore, boost global trade,” it stated.
Similarly, the CPPE said the vulnerability of the Nigerian economy to shocks of the current trade war unleashed by President Trump may be “very limited.”
The Chief Executive Officer of CPPE, Muda Yusuf, in a statement, said averagely, Nigeria’s external trade exposure to the United States is about 10 percent.
“In 2024, Nigeria’s total merchandise export was valued at 50.4 billion dollars, and Nigeria’s export to the United States that same year was $5.7 billion, which was 11.3 per cent. A tariff effect on about 10 per cent of total exports is unlikely to cause a major upset in the Nigerian economy.
“Nigeria’s major exports to the US are crude oil, petroleum gas, and nitrogenous fertiliser. While major US exports to Nigeria are mainly vehicles, wheat, and fuels.
“Other major export destinations for Nigerian products are Spain, France, the Netherlands, and Italy. Oil and gas products account for close to 90 per cent of Nigeria’s exports. This has been the position for about three decades.
“However, the Nigerian economy may be affected indirectly in some other ways. The Trump administration has practically brought closure to the AGOA trade window.
“Also, the trade war and the subsequent retaliatory tariffs would trigger inflationary pressures in the United States. This may result in elevated costs for imports into Nigeria from the United States.
“We are likely to witness some level of disruptions in global supply chains resulting from the tariff war. This could dampen the global growth outlook and affect crude oil prices. A decline in the oil price would impact Nigeria’s foreign reserves and revenue.
“The worsening inflation outlook for the US economy may trigger monetary tightening by the US Federal Reserve. This may lead to higher interest rates and trigger portfolio flow reversals in emerging economies.”
This could have implications for the naira exchange rate.
“But there are also opportunities for new trade partners, globally. Many countries that are victims of the current trade war would seek new bilateral trade relationships, which may create opportunities for Nigerian investors,” CPPE added.
