The Centre for the Promotion of Private Enterprise (CPPE) has stated that the ongoing trade war being championed by President Donald Trump of the United States of America, might cause a slump in crude oil prices and impact negatively on Nigeria’s accumulation of foreign reserve.
The CPPE also said that it could disrupt global supply chains and shutdown the African Growth and Opportunity Act (AGOA).
This was declared yesterday by the Chief Executive Officer of CPPE, Dr. Muda Yusuf, who said that “the vulnerability of the Nigerian economy to shocks of the current trade war unleashed by President Trump may be very limited. Averagely, Nigeria’s external trade exposure to the United States is averagely about 10 per cent.
“However, the Nigeria economy may be affected indirectly in some other ways. The Trump’s administration has practically brought closure to the AGOA trade window.
“Secondly, 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.
“Thirdly, 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 price. A decline in oil price would impact Nigeria’s foreign reserves and revenue.”
He also added that the worsening inflation outlook for the USA economy might trigger monetary tightening by the US Federal reserve, which may lead to higher interest rates that could trigger portfolio flow reversals in emerging economies.
“This could have implications for naira exchange rate,’ he said.
Yusuf, however, noted that there could also be opportunities for new trade partners globally as “countries that are victims of the current trade war would seek new bilateral trade relationship which may create opportunities for Nigeria investors.”
Analysing Nigeria’s trade relations with the USA, Yusuf said that in 2024, Nigeria’s total machandise export was valued at $50.4 billion and Nigeria export to the United States same year was $5.7 billion, which was 11.3 per cent.
“Tariff effect on about 10 per cent of total export is unlikely to cause a major upset in the Nigerian economy.
“Nigeria’s major exports to the USA are crude oil, petroleum gas and nitrogenous fertilizer while major USA’s exports to Nigeria are mainly vehicles, wheat, and fuels.”
