The Centre for the Promotion of Private Enterprise has explained that the shocks of United States of America President Donald Trump’s administration’s current tariff war may have a limited impact on Nigeria’s economy.
The Chief Executive Officer of CPPE, Dr Muda Yusuf, disclosed this in a statement on Thursday, April 3, 2025.
The Matrix reports that Trump on Wednesday, April 2, 2025 unleashed several tariffs on countries and a 10 percent tariff on every import.
The move had attracted outrage from world leaders, including those from Spain, Germany, and China.
Earlier, top ratings agency, Fitch Ratings warned that Trump’s massive new tariffs would send the US tariff rate dramatically higher to levels unseen since around 1910 and may drive many nations into recession.
“This is a game changer, not only for the US economy but for the global economy,” Olu Sonola, head of US economic research at Fitch Ratings, wrote in a statement on Wednesday, April 2, 2025.
Sonola said “many” nations will likely plunge into recession.
“You can throw most forecasts out the door if this tariff rate stays on for an extended period of time,” the Fitch economist said.
Reacting, CPPE said 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 about 10 percent.
In 2024, Nigeria’s total merchandise export was valued at 50.4 billion dollars, and Nigeria’s export to the United States that same year was 5.7 billion dollars, which was 11.3%. A tariff effect on about 10% of total exports is unlikely to cause a major upset in the Nigerian economy.
Nigeria’s major exports to the US are crude oil, petroleum gas, and nitrogenous fertiliser. While major US exports to Nigeria are mainly vehicles, wheat, and fuels.
Other major export destinations for Nigerian products are Spain, France, the Netherlands, and Italy. Oil and gas products account for close to 90% of Nigeria’s exports. This has been the position for about three decades.
However, the Nigerian economy may be affected indirectly in some other ways. The Trump 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 prices. A decline in the oil price would impact Nigeria’s foreign reserves and revenue.
The worsening inflation outlook for the US economy may trigger monetary tightening by the US Federal Reserve. This may lead to higher interest rates and trigger portfolio flow reversals in emerging economies. This could have implications for the naira exchange rate.
“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,” CPPE added.
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