By Isaac Samuel
On Wednesday, U.S. President Donald Trump announced a 14 per cent tariff on exports from Nigeria to the United States as part of a larger protectionist trade policy.
Trump said the U.S. will implement “reciprocal tariffs” on all countries of “approximately half” of what they charge us.
Among the countries slammed with reciprocal tariffs is Nigeria. Under the tariff plan, Nigerian exports will be charged 14 per cent tariff as against the 27 per cent charged by the Federal Government.
This move is framed as an effort to rebalance global trade and counter what the U.S. government sees as unfair trade practices.
The Trump administration argues that Nigeria imposes a 27 per cent tariff on U.S. goods exported to Nigeria creating a trade imbalance that unfairly disadvantages American businesses
Trump declared the start of what he called a new era of “fair trade,” promising to “supercharge America’s industrial base” and force open foreign markets long accused of shutting out U.S. goods.
“This is one of the most important days in American history,” Trump said.
“We will supercharge our domestic industrial base. We will pry open foreign markets and break down foreign trade barriers, and ultimately, more production at home will mean stronger competition and lower prices for consumers.
“This will be, indeed, the golden age of Americans coming back. We’re going to come back very strongly.”
The new tariff is meant to retaliate and level the playing field by increasing the cost of Nigerian goods entering the U.S. market.
This announcement is part of a broader trade agenda in which the U.S. is imposing tariffs on imports from over 50 countries, including major economies like China, the European Union, India, and Japan. Several African countries, such as Lesotho (50%), Mauritius (40%), and South Africa (30%), are also facing similar or even higher tariffs.
What Nigeria exports to the U.S.
Nigeria’s exports to the United States primarily consist of oil and non-oil products, with crude oil making up the majority. However, Nigeria also exports agricultural products and manufactured goods.
Crude Oil and Petroleum Products
Crude oil has traditionally been Nigeria’s largest export to the U.S. However, in recent years, U.S. demand for Nigerian oil has declined due to increased shale oil production in America.
Other petroleum products like liquefied natural gas (LNG) and refined oil are also part of Nigeria’s export portfolio.
Agricultural Products
Nigeria exports cocoa beans, sesame seeds, cashew nuts, and rubber to the U.S.
Textiles and Apparel
Some Nigerian fashion and textile products enter the U.S. under trade agreements like the African Growth and Opportunity Act (AGOA).
Solid Minerals
Nigeria exports precious metals, gemstones, and industrial minerals to the U.S.
Processed Foods and Beverages
Some processed Nigerian foods, such as spices, dried fruits, and condiments, are exported to the U.S.
What are the Implications of the new tariff for Nigeria?
The 14 per cent tariff is significant and will likely have short-term and long-term economic consequences for Nigeria.
In 2024, Nigeria’s foreign trade value in the full year 2024 reached N138.03 trillion, a substantial increase of 106.56 per cent compared to N66.83 trillion recorded in the same period of the previous year, according to the National Bureau of Statistics (NBS)
In addition, Nigeria achieved a trade surplus of N16.85 trillion in 2024, driven by strong export performance totaling N77.44 trillion, outpaced by imports of N60.59 trillion.
The top ten trading partners totaled N89.47 trillion in trade, accounting for 64.81 per cent of the total trade of N138.03 trillion.
European countries emerged as Nigeria’s leading trading region in FY 2024, with a trade value of N56.94 trillion. Asia followed with N49.76 trillion, fueled by substantial trade activities with major partners like India and China, while the Americas accounted for N19.70 trillion, primarily from oil and agricultural exports to the United States and Canada.
Specifically, Nigeria and the United States have a strong trade relationship, with total trade volume reaching N9.589 trillion in 2024. This includes N5.52 trillion in Nigerian exports to the U.S. and N4.07 trillion in U.S. exports to Nigeria, creating a N1.45 trillion trade surplus in Nigeria’s favour.
One of the major of the new tariff policy is there would be an increase in cost of Nigerian Exports to the U.S. The new tariff will make Nigerian goods more expensive in the U.S., reducing their competitiveness.
American businesses and consumers who rely on Nigerian products will have to pay more, potentially leading to lower demand for Nigerian exports. This could hurt industries that depend on the U.S. trade, especially those that already operate on thin profit margins.
Another impact is that it is a known fact that the U.S. is one of Nigeria’s key trade partners. With exports becoming costlier due to the 14% tariff, Nigeria might experience a drop in revenue from the U.S. trade. This could affect sectors that rely on U.S. dollar inflows, which help stabilize Nigeria’s foreign exchange market.
The 14% tariff on Nigerian exports to the U.S. represents a major shift in trade relations, with potential consequences for Nigeria’s economy. While the U.S. frames it as an effort to correct trade imbalances, Nigeria could face lower export earnings, economic uncertainty, and potential retaliation.
A possible retaliation from the Federal Government could escalate tensions and lead to a trade standoff which will make it harder for U.S. businesses to operate in Nigeria.
This could increase prices of American goods in Nigeria that will impact local businesses and consumers.
Experts are of the opinion that a sudden shift in trade policy can create uncertainty for businesses operating in Nigeria, particularly those engaged in U.S. trade. Foreign investors might hesitate to invest in industries affected by the tariff. If the Nigerian government fails to negotiate a better trade deal, this could further weaken investor confidence in the economy.
Indeed, Nigeria might need to look for alternative markets for its exports, such as China, Europe, or other African countries.
The Federal Government should also look at reducing dependence on crude oil by expanding industrialization and agricultural exports that can help Nigeria withstand global trade shocks.
