Nigeria’s options amidst Trump’s global tariff onslaught

Nigeria is already caught in the current complicated web of tariffs levied by the President of the United States of America, Donald Trump, in the quest to “Make America Wealthy Again”. Specifically, the U.S. tariff on Nigeria is a 14 percent tax on all exports from Nigeria to the United States, as against the 27 percent charged by Nigeria on imports from the U.S.

Besides Nigeria, President Trump has also placed elevated tariff rates on many other nations that run trade surpluses with the U.S. while imposing a 10 percent baseline tax on imports from all countries. Trump, who said the tariffs were designed to boost domestic manufacture in the U.S., lamented that a global trade system the United States helped to build after World War II, “has been looted, pillaged, raped and plundered” by other nations.

The rash of tariffs by the U.S. and retaliatory actions by many affected countries, especially China, have put the world on edge — leading to an unfolding trade war. Each country is also uniquely affected by this unexpected turn of events that is already disrupting global trade flows, supply chains, and diplomatic alliances.

Nigeria and the U.S. have been trading partners for a long while. Available statistics show that in 2024, for instance, Nigeria’s exports to the U.S. totaled $6.29 billion, mainly consisting of crude petroleum, petroleum gas, and fertilizers, while the U.S. exported $4.2 billion in goods to Nigeria. Trump’s tariffs on Nigerian goods will certainly alter these statistics — reflecting a decline in Nigeria’s exports to the US, which could lead to reduced export revenue for Nigeria.

Already, following Trump’s tariff gambit and his other policies, prices of crude oil have nosedived in the global market: from circa $80 per barrel early this year to around $60 per barrel in the second week of April. And given the already raging trade war and geopolitical tensions in parts of the globe (including the Russia-Ukraine war), crude prices could crash further during the year (2025) and beyond.

This scenario alone poses a serious threat to the Nigerian economy. Not only is the nation’s 2025 budget based on an assumed oil price of $75 per barrel, but also an oil production volume of over 2.0 million barrels per day. OPEC statistics however show that Nigeria’s oil production/export level still hovered around 1.5 million barrels per day in the first quarter 2025.

All these translate to shrinking revenue for Nigeria, especially foreign exchange earnings that essentially come from crude exports. Already the N54.99 trillion 2025 Federal Budget has about N13 trillion in-built deficit; this figure could rise much higher due to crashing revenue owing to the significant oil price fall.

The unfolding dreary trend makes a number of measures ineluctable for Nigeria, including the expeditious reworking of its 2025 budget that is already imperiled. The minister of finance and coordinating minister of the economy, Mr. Wale Edun, has alluded to this inevitable and urgent course of action.

Edun said at a forum in Abuja that the economic management team of the federal government had commenced reviewing key assumptions behind the 2025 national budget, including oil price benchmarks and projected revenue flows, to mitigate fallout from rising trade tensions, and “safeguard the country’s fragile macroeconomic stability.”

“We are going back to the drawing board to reassess our budget framework and economic assumptions,” Edun said at the Corporate Governance Forum in Abuja, hosted by Ministry of Finance Incorporated (MOFI). “There is global uncertainty at a huge level; we must prepare for all possible outcomes,” he said.

While the budget resetting is ongoing, it is equally imperative that the nitty-gritty of the tariffs be promptly considered on a bilateral basis. Since the 14 percent U.S. tax on Nigerian goods was on a reciprocal basis, further deliberations around the figures could result in their eventual (downwards) adjustment.

While it is claimed that it was Nigeria’s own 27 percent import tariff on U.S goods that attracted the (reciprocal) 14 percent by Trump, nothing is really cast in stone. The ‘urgency of now’ requires that the U.S. and Nigeria topmost diplomatic roundtable kicks off — with a view to reviewing the ‘punitive’ tariff rates on both sides.

Nigeria, economically and otherwise, is too weak to engage the U.S. in any ‘retaliatory’ tax initiatives — like other stronger economies (China, Canada, European countries and UK) are doing. Beyond the tariff matter, the U.S.’s socio-political and military might are rather overwhelming for Nigeria to confront.

Now, Nigeria might even begin to consider retracing its recent steps in joining the BRICS (Brazil, Russia, India, China, and South Africa) economic bloc. This group is already exploring the possibility of creating a new currency to challenge the U.S. dollar’s global dominance. Covertly, through the BRICS that already includes Egypt, Ethiopia, Indonesia, United Arab Emirates, Iran, among others, China and Russia are driving the effort to develop an alternative currency to the dollar.

Nigeria officially joined BRICS as a partner country on January 17, 2025, a few days before Donald Trump’s inauguration. The move apparently aligns with Nigeria’s goal of diversifying its global partnerships and strengthening its economy through increased trade and cooperation with BRICS member countries.

However, in his avowed isolationist and nationalistic economic policies and initiatives, President Trump perceives the BRICS as a body out to challenge the hegemony of the U.S. dollar. He, therefore, detests all things pertaining to the emergent economic bloc. The imposition of the 14 percent tariff on Nigerian goods, on the flimsy reciprocity excuse, could be part of the vicarious liabilities for being in the BRICS fold.

Howbeit, the evolving ‘New World Economic Order’ embodied by President Donald Trump portends a yet unfathomed gamut of adverse effects on Nigeria. It is therefore the nick of time to commence the effective diversification of the Nigerian economy.

Nigeria must begin to leverage its obvious comparative advantage, especially the untapped natural resources and youthful population, to assert itself as the truly leading economy on the African continent. For too long the country has remained a largely mono-product economy: depending so heavily on crude oil exports.

The agricultural, solid mineral and blue economy sectors deserve very urgent attention, to deeply explore and utilize their potentials to drive Nigeria’s much-needed growth — especially in pursuit of the $1 trillion economy target by 2030. Nigeria can no longer afford to be paying lip service to the implementation of the African Continental Free Trade Agreement (AfCFTA).

The unfolding global trade shifts and alliances demand that Nigeria effectively takes the lead in actualizing the noble objectives of boosting intra-African trade, and accelerating the economic development of the continent. This, in part, is why Nigeria must deal very expeditiously and decisively with the centrifugal forces within the Economic Community of West African States (ECOWAS).

The current situation where Mali, Burkina Faso and Niger Republic have ‘broken away’ from the ECOWAS’ fold is inimical to any meaningful economic cooperation and development of the sub-region. Already, the trio, under military dictatorships, has begun taking antagonistic stances against Nigeria, and recently went ahead to levy tariffs against the country.

The portents of the Trump tariff and lingering chasm within ECOWAS are threatening enough to stimulate creative strategies and actions by Nigeria to remain an economically viable sovereign nation. These are no longer issues to be treated with kid gloves; more so, in the face of the already deep-rooted insecurity in the country. The time to act is now!

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