Why Nigeria, Africa shouldn’t worry about U.S. tariff imposition, by Muda Yusuf

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said there is no cause for worry over President Donald Trump’s plan to impose additional tariffs and taxes on goods exported to the United States as Nigeria and the rest of Africa mainly trade with Asia and Europe.

At his Monday inauguration, Trump announced a plan to establish the External Revenue Service that would impose trade tariffs and taxes on other countries. Industry experts have expressed worry that this move could disrupt international trade and further complicate the already complex global tax system.

However, Yusuf said there is little to worry about as the bulk of Nigeria’s trade is with Asian countries and Europe. “Our trade volume with the U.S. is mostly oil exports and I don’t think it is even as much as before. Given that the proportion of trade between Nigeria and the US is not as significant as we have with Asia, I don’t think we should be overly worried. Trump’s target I believe is mostly China, Europe, Canada and so on. I doubt Africa and Nigeria will be greatly affected,” he said.

He added that the impact would vary according to the trade volume with the U.S. and since the volume of trade is not even up to half of the Asian numbers, he predicted that the impact wouldn’t be too significant.

“Since his target is the revenue he intends to get from said tariffs, it is the U.S.’ major trading partners that would be affected mostly. Nigeria and most countries in Africa are not major trading partners.” He said the tariff imposition would trigger reciprocal actions from the affected countries because the U.S. exports to other countries as well.

“It is going to be tit-for-tat, but it would certainly affect global trade and supply chains, force a realignment of trade partners and so on. Also, businesses would simply look for alternatives because as soon as it becomes too difficult or expensive to trade with the U.S., people would quickly look for other trading partners and bilateral relationships; some investments would relocate to other countries from where they will export to the U.S.

“You can be a Chinese company and export to the U.S. from China. However, if the U.S. is making life difficult for you as a producer in China, you can simply move to another country that has no tariff imposition, set up there and export to the US from there.” He said the global trade market should prepare for retaliatory trade policy actions from other countries, which will, in turn, trigger inflation within their country.

He said since U.S. imports are not affected yet; Nigeria has little to worry about since the U.S. mostly imports oil from Nigeria. “Non-oil export numbers from Nigeria to the U.S. are very low and I doubt it will be affected. He is targeting countries that are exporting into the U.S. and looking for more opportunities to export American goods to other countries. His intention is clearly to protect American industries and since our export to them is not high, we don’t have much to lose.”

He said this presents an opportunity however for Nigerian manufacturers to ramp up production and exports since goods from affected countries may become more expensive or scarce, providing a gap they can now fill.