Olalere modupeoluwa
On April 2, 2025, U.S. President Donald Trump declared a historic increase in trade policy, levying duties on imports from more than 180 countries. This drastically changed global commerce.
These measures, which increased the average trade-weighted tariff in the United States from 2% to 24%, were conceived as a “reciprocal” strategy to compel countries to eliminate trade barriers against U.S. commodities. Though major nations like the EU and China made headlines, the ripple effects touched Nigeria, Africa’s biggest economy and a major U.S. trade partner.
Nigeria’s economic shortcomings, such as an excessive reliance on oil and outmoded trade restrictions, are drawing attention because they threaten its ten to twelve-billion-dollar exports to the United States.
Nigeria’s Economic Vulnerabilities Exposed by Tariffs
The United States imposed a 10% baseline tariff and a 14% reciprocal charge on Nigerian goods in reaction to Nigeria’s limits on American imports. Though less than the 50% duty on Lesotho or the 38% tariff on Botswana, the policies endanger Nigeria’s non-oil export industries.
Nigerian Minister of Industry, Trade, and Investment Dr. Jumoke Oduwole estimates that small firms depending on the African Growth and Opportunity Act (AGOA) could lose $6 billion in annual exports. Almost half of Nigeria’s trade with the US comes from this.“Our exporters face rising costs and canceled orders,” she stated. “The psychological impact alone could deter future investments.”
The non-oil sector, encompassing textiles, cocoa, and processed products, has been the most severely affected. For instance, Nigerian textile exporters, who transported $300 million in merchandise to the United States in 2024, are currently at a 24% price disadvantage compared to their counterparts in tariff-exempt nations.
According to a garment factory proprietor in Lagos, “Buyers are requesting that we cover the tariff costs, but our margins are already razor-thin.” Our operations will cease by the conclusion of the year for a significant number of us. A similar threat is posed to the cocoa industry, which, according to the Nigerian Export Promotion Council (2023), employs more than 500,000 smallholder producers. In 2023, processed cocoa exports to the United States experienced a 15% increase in demand. However, the demand is now dubious as American chocolatiers seek cheaper alternatives from Ghana and the Ivory Coast.
Given Nigeria’s reliance on oil, the possible side effects on her economy could also be somewhat severe. Should tariffs limit world manufacturing, crude oil demand could drop, aggravating price volatility.
With 90% of its export revenues and 60% of its government income derived from oil, Nigeria remains highly vulnerable to fluctuations in global oil prices.
According to a 2020 projection by the Nigerian Economic Summit Group (NESG), every $10 drop in oil prices could result in a 1.5% reduction in the country’s GDP growth.
This analysis, released in the wake of the COVID-19 pandemic, underscored the urgent need for economic diversification to cushion against external shocks. “Tariffs are a double-edged sword,” noted a senior economist. “Even if oil avoids direct tariffs, the global trade slowdown will shrink Nigeria’s revenue pipeline.”
Nigeria’s foreign exchange issue further complicates these challenges. The naira dropped 40% against the dollar in 2024, which caused problems for the Nigerian Central Bank (CBN), which is trying to maintain market stability. Tariffs, which reduce export earnings and can cause hyperinflation, further weaken the CBN’s ability to protect the currency.
A parallel market trader in Abuja observed, “Dollar scarcity is worse than during COVID-19. Businesses are hoarding dollars, afraid the naira will collapse.
Nigeria’s Delayed Response and Diplomatic Shortfalls
Nigeria has been subjected to widespread criticism for its reactive and disorganised response, as countries such as India and Vietnam promptly dispatched trade envoys to negotiate exemptions. While on a “working visit” abroad, President Bola Tinubu represented a leadership vacuum throughout the tariff announcement week. A senior diplomat in U.S.-Nigeria relations confided, “Other African presidents were on calls with the White House. Our silence signaled indifference.”
The government’s dependence on the World Trade Organisation (WTO) for recourse has also been ineffective. Typically, the dispute process at the World Trade Organisation (WTO) requires 18–24 months to resolve cases, which is significantly longer than the time required to address imminent threats.
Moreover, the Trump administration has systematically sidelined the WTO, rendering its rulings symbolic rather than substantive.
“The WTO is a graveyard for trade disputes now,” said a Geneva-based trade lawyer. “Nigeria’s strategy is like bringing a knife to a gunfight.”
These errors are further exacerbated by the public criticism of Nigeria’s 25-item import prohibition and restrictive policies by the U.S. Trade Representative (USTR). The USTR’s 2024 report accused Nigeria of maintaining “some of the highest tariff and non-tariff barriers in Africa,” including 35% levies on U.S. vehicles and bans on American dairy products.
A Nigerian trade official acknowledged privately, “Our protectionist policies gave the U.S. moral high ground. We’re being outmaneuvered on the global stage.”
Domestic political opposition to change makes things even more difficult. To protect local businesses, Nigeria’s industry lobby has strongly opposed any concessions. “Lowering tariffs now would be economic suicide,” argued the head of a major manufacturers’ association. This tension has paralysed the government, making it unable to offer meaningful compromises to the U.S.
Global Trade Disruptions and Nigeria’s Path Forward
The World Trade Organisation anticipates a 0.2% decrease in global merchandise trade volume in 2025, with developing nations such as Nigeria bearing the brunt of this decline. Market instability has been exacerbated by retaliatory tariffs imposed by China and the EU, which resulted in a 5% decline in global stock markets in April 2025. China imposed a 125% tariff on U.S. products. Exporters are currently in a state of uncertainty, as Nigeria’s baseline 10% rate remains in effect despite the temporary suspension of tariffs above 10% by the United States for 90 days.
To address this crisis, specialists recommend that Nigeria implement three essential reforms:
Initially, proactive bilateral negotiations with the United States were conducted to secure sector-specific exemptions, with a particular emphasis on agriculture and textiles.
Second, diversification of export markets, particularly strengthening trade links with the EU, China, and AfCFTA allies, to minimise U.S. dependence.
Third, modernising trade policies to end import prohibitions and streamline customs.
Dr. Oduwole emphasised the urgency of action: “AGOA was a lifeline, not a permanent solution. We must innovate or risk irrelevance.” To assist SMEs in expanding into new markets, the government announced in May 2025 a $500 million export diversification fund.
Critics contend that the fund is insufficient, though. “Nigeria needs systemic reforms, not stopgap measures,” a Lagos Chamber of Commerce representative said.There is a considerable stake. Nigeria might lose 250,000 jobs linked to U.S. exports if it doesn’t move quickly, the Manufacturers Association of Nigeria said. President Tinubu’s Economic Revival Agenda, which aims for 6% GDP growth by 2026, is also in danger of being derailed by the levies.
“This is a wake-up call,” concluded a Central Bank official. “We can’t rely on oil or foreign goodwill to prosper. The time for hard reforms is now.”
Nigeria’s deficiencies in infrastructure, especially in ports and electricity, worsen trade inefficiencies. Congestion and corruption afflict Lagos’ Apapa Port, which handles 70% of Nigeria’s imports. According to a 2024 World Bank analysis, clearing cargo at Nigerian ports averages 21 days, while in South Africa, it takes just 3 days. “If we can’t fix ports, even tariff exemptions won’t save us,” admitted a customs official.
Energy shortages also affect competitiveness; manufacturers pay 40% of manufacturing expenses on diesel generators because of inconsistent grid supply. “Tariffs are just one piece of the puzzle,” said a factory owner in Ogun State. “If we don’t solve power and logistics, we’ll keep losing to Vietnam and Bangladesh.”
The U.S. tariff war has revealed Nigeria’s antiquated trade practices and overreliance on oil. Although the immediate view is negative, the crisis offers a chance to quicken diversification and increase diplomatic agility. Nigeria’s capacity to adapt will decide whether it emerges stronger or suffers collateral damage in a changed economic system as global protectionism expands.