There are fears among operators about the likely effects of President Trump’s tariff policy on the luxury housing market, especially for property developers, who import building materials from the U.S. and other countries. Stakeholders see the development as a wake-up call to promote local content in building materials production, Victor Gbonegun reports.
Hope for better days in the luxury real estate market may be dashed if the ongoing trade war by the United States with over 90 countries continues unabated.
There are worries that the now-suspended reciprocal tariffs policy could drive up construction costs, lead to delays or project abandonment, reduce the availability of new homes, impact mortgages and exacerbate supply shortages.
Experts believe that if Nigeria and the U.S. don’t tread a path of caution but implement a reciprocal tariff hike, such a move will increase the cost of importing building materials from the United States, especially for those who play in the luxury market.
The U.S. imposed tariffs on a growing list of countries, heightening concerns about global economic growth. Trump announced so-called reciprocal tariffs on imports from over 90 nations.
President Donald Trump, who described the announcement as ‘Liberation Day’, said the new taxes are needed to erase a trade deficit between the U.S. and other countries, ranging from China to the European Union. Although the execution of the new policy has been paused for 90 days, economic uncertainty regarding its implementation looms large for countries like Nigeria.
Trump said his administration determined the tariff rate for each country based on the monetary levies those nations charge on U.S. imports, as well as non-monetary trade barriers like regulations that make it tougher for American products to enter those markets. He added that the reciprocal tariffs are still only half the rates charged by those nations on U.S. products, characterising his new levies as “kind.”
The International Monetary Fund (IMF), led by its Managing Director, Kristalina Georgieva, warned that the world economy is expected to see a slower growth rate this year, and experience higher inflation amid the fallout of President Trump’s trade war, raising alarm that ‘protectionism erodes productivity’.
Trump had recently announced that the U.S. would begin imposing a sweeping 14 per cent tariff on all imports from Nigeria as part of a dramatic pivot in America’s global trade policy. Trump’s tariff trade war threatens Nigeria’s N323.96 billion non-oil and non-energy exports to the United States.
Nigeria may not be among America’s largest trading partners, but the nation sends about $5 billion worth of goods to the U.S., out of which 80 per cent of that is crude oil. Nigeria’s exports are placed on a 14 per cent tariff, while Nigeria charges 27 per cent on U.S. import goods.
Notwithstanding that Nigeria may not be as vulnerable as other African countries that got over 30 per cent tariff hike, given macro-economic effects, the experts are worried that whatever happens to the global economy will have a significant effect on the local economy.
Essentially, a tariff is a tax imposed on goods entering a country. With this new 14 per cent tariff, every $100 worth of Nigerian goods will now cost a U.S. partner about $114. Nigeria imports about $5 billion worth of goods from the U.S. yearly, including building materials and industrial machinery.
Minister of Industry, Trade, and Investment, Jumoke Oduwole, had expressed concerns that new 10–14 per cent tariffs could hurt the price competitiveness of Nigerian goods in the U.S. market, especially in the emerging value-added sectors Nigeria is hoping to grow.
Although Trump’s tariff targets exports to the U.S., the existing scenario has triggered retaliation on imports, with the Federal Government having inaugurated a committee to review the National Trade Policy of Nigeria 2002.
Nigeria’s building sector depends heavily on the importation of materials, accounting for about 70 per cent of imports. The Nigerian Building and Road Research Institute (NBRRI) had recently noted that common materials imported, including doors, are available locally. Other common imports include steel, aluminium used as roofing sheets, panels, windows, cement, and other construction equipment.
According to the United Nations COMTRADE database on international trade, Nigeria’s imports from the United States, including stone, plaster, cement, asbestos, mica or similar materials, were $755.64 in 2023.
Nigeria is the largest importer of building materials, contributing 10,286 import shipments, which attests to its significant market share of 34 per cent. Nigeria imports building materials from over 164 countries globally.
China, the United States, and Germany are the leading suppliers, accounting for 73 per cent of Nigeria’s total building material imports. China tops the list with 139,163 shipments, which equates to a 43 per cent market share. It’s closely followed by the United States with 63,733 shipments, representing 20 per cent market share, and Germany with 32,982 shipments.
Data by Volza, a United Arab Emirates-based market research firm, revealed that from October 2023 to September 2024, Nigeria imported building materials from 38 different countries. China, Germany, and South Africa were the top three exporters, together accounting for 89 per cent of Nigeria’s total building-materials imports. China was the largest exporter with 77 per cent or 3,899 shipments, followed by Germany with 7 per cent or 367 shipments, and South Africa with 5 per cent or 272 shipments.
In 2024, bilateral trade between Nigeria and the U.S. stood at N9.59 trillion, representing 6.9 per cent of Nigeria’s total trade volume. Nigerian exports to the U.S. amounted to N5.52 trillion, while imports from the U.S. stood at N4.07 trillion.
Experts say if the tariffs are maintained by the Trump administration and if other nations impose retaliatory tariffs, both the U.S. and other countries will suffer serious economic recessions. While the Federal Government has taken some initiatives to reduce import levies on some materials, and is making efforts to promote local manufacturing.
With inflation resuming an upward trend and rising to 24.23 per cent in March, the development may significantly increase the overall cost of construction projects and trigger a rise in prices of homes/rent and make mortgages difficult to close.
Speaking on the development recently, the Director-General,Manufacturers Association of Nigeria (MAN), Mr Segun Ajayi-Kadir, in a statement, expressed worry about potential pressure on Nigeria to reciprocate by reducing its tariffs on U.S. products.
Ajayi-Kadir said while the U.S. may frame its move as a step toward “fair trade,” the reality was that lowering tariffs on U.S. imports could flood the Nigerian market with subsidised goods, thereby undermining local producers.
Expounding on the issue, a Professor of Estate Management at the University of Lagos, Austin Otegbulu, argued that if the United States implements the new tariff, it will increase the cost of importing building materials from the United States to Nigeria, especially for those who play in the luxury real estate market.
He said, “The cost will be passed to the consumers, resulting in cost-push inflation. The alternative is that the importers may decide to import from other countries. The last option will be to reduce the volume of imports from the US. The policy, if implemented, will likely increase property prices in the affected sector.”
He observed that some of the goods imported from the U.S. are goods produced in China and sent to the U.S. Otegbulu, who doubles as a fellow of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) added, “Nigeria imports building materials from different countries, including the United States. The major countries that export building materials to Nigeria are China, India, and Germany. They also import the following building materials: EPDM roofing rolls, PVC roofing rolls, vinyl flooring, doors, PVC tarpaulin, electrical appliances, trucks, prefabricated buildings and others.
“If Nigeria reduces its tariff from its present 27 per cent, it will reduce the prices of its goods in the United States and may increase demand for Nigerian goods with a consequent improvement in our balance of trade. The U.S. may or may not reciprocate by reducing its tariff.
“If the U.S. new tariff regime is implemented, it will most likely affect luxury apartments and industrial buildings. It will affect the sector more and the overall housing sector.”
Immediate past president of the International Real Estate Federation (FIABCI-Nigeria Chapter), Mr Gladstone Opara, said Trump’s tariff imposition on countries, especially Nigeria, might be a blessing in disguise as Nigeria imports materials that it can produce locally. He stated that the development may be the wake-up call to revive moribund industries and establish new ones to cater for local materials’ needs.
“Nigeria became complacent over the years. The good days might be over if Trump implements the tariff policy globally. We need to look inward to build our houses; we are still under-housed despite the population growth.’’
“The global trade tariff war will slow Nigeria down, but at the end of the day, it will be a blessing in disguise because we are going to be forced to develop our local building materials industries. We can no longer continue to leave our resources untapped,” Opara emphasised.
He stressed that Nigeria lacked the strength to challenge those from whom it imports building materials by introducing a counter-import tariff hike, as it will still take time to develop its local building materials sector, adding that Nigeria has to compromise.
He advised the federal and state governments to consider replicating foreign building materials hubs locally. Opara pointed out that Nigeria can be self-sufficient in building materials production, but lamented that what the nation lacked is the ‘political will’.
