… Wipe Out N2trn from Nigeria’ Agricultural Exports
The Manufacturers Association of Nigeria (MAN) has stated that the 14 per cent tariff imposed on Nigerian exports to the United States of America (USA) By President Donald Trump could halt Nigeria’s transition from exporting raw commodities to semi-processed and finished goods and wipe out between N1 trillion and N2 trillion from the country’s processed agro exports to the United States.
In its “Position on the U.S Tariff Hike on Nigerian Manufacturing Sector and the Broader Economy,” MAN said that the hike in tariff would discourage firms investing in value-added manufacturing in Nigeria and constrain them to revert to exporting raw materials.
The Director General of MAN, Mr. Segun Ajayi-Kadir, said: “MAN members who are exporters in Agro-processing, chemicals and pharmaceutical, basic metal, iron & steel, non-metallic mineral products and other light industrial manufacturing rely heavily on the U.S. for market access.
“With increased costs for American buyers due to the tariffs, demand for Nigerian products is expected to decline. For instance, processed agricultural goods such as cocoa derivatives, sesame seeds, and ginger, which have gained modest penetration in U.S. markets, are likely to witness a drop in export volume.
“According to the National Bureau of Statistics, agricultural exports accounted for over N4.42 trillion in 2024, with the U.S. being one of the top destinations. The tariff could potentially wipe out N1 to N2 trillion of that figure annually.”
He added: “In addition to revenue losses, the new tariffs pose a significant disincentive to firms investing in value-added manufacturing.
“Over the past decade, manufacturers have made concerted and strategic efforts to support the country’s transition from exporting raw commodities to semi-processed and finished goods.
“However, higher market-entry costs because of higher tariff on Nigerian products reduce the profitability of such investments, making it more attractive for firms to revert to exporting raw materials.
“This is counterproductive to Nigeria’s industrialisation agenda and compromises the long-term goal of achieving export diversification under platforms such as the African Continental Free Trade Agreement (AfCFTA).”
Ajayi-Kadir also noted that the implications of the tariff hike on employment in the manufacturing sector are very dire.
He said that many companies might reduce production sand downsize their workforce to cut costs as export revenues fall.
“Contract manufacturers, small-scale industrialists, and firms operating in special economic zones targeting the U.S. market are likely to be worst hit.
“This could lead to job losses at a time when the national unemployment rate remains high, and youth underemployment continues to pose a socio-economic threat,” Ajayi-Kadir said.
Commenting on the impact of the tariff hike on the broader Nigerian economy, MAN said that any significant reduction in exports to the U.S. will erode the current trade surplus Nigeria enjoys in its trade relations with the USA and potentially push the balance into deficit.
Ajayi-Kadir said: “This will have immediate implications for the nation’s balance of payments and could result in a drawdown of foreign reserves, putting further pressure on the exchange rate.
“The CBN may be forced to intervene more aggressively in the foreign exchange market, thereby reducing its buffer for managing other macroeconomic shocks.”
MAN is also concerned that the tariff would distort the federal government’s 2025 budgetary projections.
“The budget, pegged at N55 trillion, assumes oil prices will average $75 per barrel throughout the fiscal year. However, the reality of the global oil market is starkly different, with current prices already falling below $60 per barrel.
“If export earnings from non-oil sectors such as manufacturing also decline due to the new U.S. tariffs, the government will face greater shortfall in revenue.
“This could lead to cuts in capital expenditures, delays in infrastructure projects, and an increase in borrowing—all of which could undermine economic growth and stability.”
MAN also remarked that there is also the inflationary dimension to consider “as the trade environment becomes more uncertain and foreign exchange earnings dwindle, monetary authorities may be compelled to raise interest rates in a bid to control inflation and stabilise the naira.
‘However, higher interest rates will increase the cost of borrowing for businesses, including manufacturers, and could stifle domestic investment.
“The ripple effects will be felt by consumers, as firms pass on higher costs through increased prices for goods and services. This will exacerbate the cost-of-living crisis and further strain household incomes.”
MAN stated emphatically that the tariff hike will halt investors’ confidence in Nigeria’s economy that has been striving to position itself as a manufacturing hub in West Africa, partly by attracting foreign direct investment from firms interested in tapping into both domestic and export markets.
“The new tariff regime makes Nigeria a less attractive proposition for such investors, particularly those who view access to the U.S. market as a key strategic advantage.
“In 2023 alone, Nigeria’s manufacturing sector attracted over $1.6 billion in capital importations. That figure could decline significantly in 2025 if investor confidence is not restored through robust policy responses.”
