Despite recent trade policy shifts announced by the United States, economic analysts suggest Nigeria’s economy is unlikely to experience significant disruption. Reports from Renaissance Capital Africa and the Centre for the Promotion of Private Enterprise (CPPE) indicate that the direct impact of the new US tariff policy will be minimal.
The core concern stemmed from the US imposition of a 14 percent tariff on Nigerian imports, a response to alleged Nigerian duties on American goods. However, the data suggests this move may not pose a severe threat. As stated by Renaissance Capital’s analytic document, “For Nigeria, the impact would cut 0.1 per cent of GDP. But this is surely an exaggeration, because Nigerian oil can be sold elsewhere.” This sentiment highlights the resilience of Nigeria’s primary export, crude oil, and its ability to be redirected to alternate markets.
Data from the National Bureau of Statistics (NBS) reveals that between 2015 and 2024, Nigeria’s trade with the US totaled N31.1 trillion, with imports accounting for N16.4 trillion. While this figure seems substantial, it only represents 8.7 percent of Nigeria’s global exports. Muda Yusuf, Chief Executive Officer of CPPE, reinforces this point, stating, “A tariff effect on about 10 per cent of total exports is unlikely to cause a major upset in the Nigerian economy.”
The US policy involves a 10 percent baseline tariff on all imports and reciprocal tariffs based on specific countries. Despite this, experts emphasize that Nigeria’s main export, oil, holds a strong position. “Does it really matter to an oil exporter if the U.S. imposes tariffs? Not much. Exporters can divert their oil to any other country,” stated the Renaissance Capital analysis.
Although the immediate direct impact is deemed minimal, analysts acknowledge potential indirect effects. “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 prices,” noted Yusuf. Consequently, any drop in oil prices could affect Nigeria’s foreign reserves and revenue.
Furthermore, US inflation pressures, triggered by the trade dispute, could lead to higher import costs for Nigeria and monetary tightening by the US Federal Reserve. “This could have implications for the naira exchange rate,” warned the CPPE report.
However, the situation also presents new opportunities. As the CPPE notes, “But there are also opportunities for new trade partners, globally. Many countries that are victims of the current trade war would seek new bilateral trade relationships, which may create opportunities for Nigerian investors.”
In conclusion, while the US tariff policy introduces some uncertainty, Nigerian economists maintain a cautious optimism. Their analysis suggests that Nigeria’s economy is positioned to withstand the immediate challenges, with oil exports providing a buffer. The focus now shifts to navigating potential indirect impacts and capitalizing on emerging trade opportunities.
