Gbenga Adeosun
In the build-up to the November 2024 U.S presidential elections, Donald Trump made the economic issue a major campaign talking point, declaring the Biden administration’s management of the economy as ineffectual and disastrous for the US economy. He claimed Biden’s handling of the economy has led to the astronomical rise in the price of goods and services, heightened domestic inflation, and high mortgage rates. As part of proposed reforms and initiatives wrapped around his “America first” agenda, he promised a return to moderate prices if elected, and outlined how he would enforce tariffs to secure better trade deals for the US. Although imposing high tariffs on imported products might lead to an increase in the prices of such goods, Trump believed that imposing such tariffs would boost domestic production of such items, create jobs, lessen dependency, and improve America’s trade position.
At the heart of his protectionist posturing is a sweeping tariff regime that could reshape global commerce, trigger retaliatory actions from key trade partners, and send shockwaves through global supply chains. His comments and executive orders show he is ready to lock horns with China, the European Union, and Canada to achieve his America First agenda which prioritises domestic manufacturing over global free trade.
Trump has always perceived tariffs as a tool for flexing political muscle on the international stage and has often used it as a means to that end; an avenue to shape relationships between the U.S and other countries and to achieve certain geopolitical agendas as exemplified by his protracted trade war with China during his first term in office.
Since his return to the White House, Trump has slammed tariffs on Colombia for refusing to receive immigrants deported by his administration; he has threatened 25% tariffs on neighbouring Canada and Mexico citing concerns over border security, while also resuscitating the trade tussle with China to stifle its dominance in American and global markets by placing a 10% tariff on Chinese imports.
In a dramatic turn, he reached a last-minute agreement with Mexico, temporarily suspending the tariffs for 30 days in exchange for a commitment to deploy additional Mexican troops along the border. A similar accord was brokered with Canada, marking a temporary resolution to what had threatened to escalate into a major trade standoff. The issue is still delicate, however, as tensions over tariff matters are yet to abate.
The temporary suspension was reversed on February 27 2025 when Trump said tariffs of 25% on Mexican and Canadian goods will take effect on March 4, 2025, while threatening to impose an additional 10% on Chinese imports on the same date. Mexico, China, and Canada are America’s top three trading partners and are poised to impose retaliatory tariffs on the U.S. if Trump goes ahead with his plan. Simultaneous tariffs on all three nations could lead to soaring prices for American consumers, especially when inflation is already heating up.
“Drugs are still pouring into our Country from Mexico and Canada at very high and unacceptable levels,” Trump said in a post on Truth Social, tying tariffs on America’s neighbours to illegal migration and flow of fentanyl into the country.
In a related development, Trump also said a 25% tariff on imports from the European Union (EU) was imminent because the bloc was taking advantage of the U.S. in trading issues. The EU fired back, promising to protect European businesses, workers, and consumers from unjustified tariffs. It said the EU would react firmly and immediately against unjustified barriers to free and fair trade including when tariffs are used to challenge legal and non-discriminatory policies.
While it may seem like a distant issue, the ripple effects of this emerging tariff war could profoundly affect the Nigerian economy. From energy prices to shifting trade partnerships and the flow of foreign investment, Nigeria’s future could be shaped by this global economic shift; whether the country is ready for it or not.
As shown in the chart below, the U.S. was Nigeria’s fourth largest trading partner after China, India, and Belgium respectively in Q3, 2024. Most of the goods Nigeria imported from the U.S. that same year included machinery, vehicles, mineral fuels, and cereals.
How will these tariffs affect the goods coming from the U.S. to Nigeria? In Canada, the proposed tariffs will primarily affect the automobile and auto parts industries, while Mexico faces restrictions on energy exports to the U.S, the world’s largest economy. The tariffs have faced criticism from countries that rely on foreign trade with the affected countries. Nigeria has decades of economic ties with both China and the U.S. and could be vulnerable to this trade war if the tariffs remain in place.
If the U.S. puts tariffs on goods from Canada and Mexico, what will be the cost effects when companies in those countries have to pay more money to sell their products to the U.S, and the U.S. sells those goods back to Nigeria? This is an area of concern for Nigeria because most imported Nigerian goods are shipped from the U.S. or China, and Nigerians will have to face the ripple effects of cost increase. Taking a car dealer for example, if the U.S imposes tariffs on key trade partners like Canada and Mexico, the cost of vehicle production in those countries may increase. Since Nigeria imports a significant number of vehicles from the U.S, higher production costs could translate into higher prices for imported cars. This means that if cars are more expensive to buy abroad, Nigerians will buy them more expensively in Nigeria from the car dealers.
This could also compound the tariffs and levies on imported goods from Nigeria’s ports. In October 2024, the cost of clearing rose by 110.3%. Before the naira devaluation, the cost increased from ₦770.88 to ₦1,621.259 per dollar in that same month. However, to bypass these costs, the options available are for Nigerians to buy cars from other markets like Europe or Asia. But more profitable is for Nigerians to invest more in buying Nigeria’s manufactured products such as locally assembled vehicles. Interestingly, Nigeria’s demand for imported vehicles has declined for the last three quarters. This is likely the result of reduced purchasing power as inflation has risen, and with it, the cost of clearing cars.
Data from the U.S Census Bureau reveals a persistent trade deficit in 2022, 2023, and 2024 thanks to Nigeria’s reliance on the U.S for imports. For example, Nigeria imported $3.24 billion worth of goods, with cars being the top imports valued at $580 million from the U.S in 2022. Coupled with this effect is that Nigeria’s naira has depreciated in value against the U.S dollar, making imports more expensive.
One of Trump’s biggest moves is a 10% tariff on Canadian oil. Canada is a major supplier of crude to the U.S, and this tariff could force American refiners to look elsewhere for oil imports. Could Nigeria step in to fill the gap? Possibly, as Africa’s largest oil producer, Nigeria exports more than half of its crude to Europe and the U.S. If Canadian oil becomes more expensive for U.S buyers, demand for Nigerian crude may rise, pushing up global oil prices. This could boost Nigeria’s foreign exchange earnings—but it’s not all good news as higher oil prices often lead to higher petrol costs in Nigeria which could hike domestic inflation. Given that Nigeria still relies on fuel imports, the government’s ability to stabilise local energy prices will be tested. Nigeria’s economy is highly vulnerable to fluctuations in oil prices and if higher energy costs lead to inflation, the public may bear the brunt of the price hikes; compounding the struggles of the overburdened citizens already grappling with economic reforms.
Nigerians face more pain than gain from global trade wars and the effects of these tariffs are felt at home. This is not the first experience of a trade war between the U.S and the other countries imposing tariffs on each other’s imports. During Trump’s first administration, the U.S. raised tariffs on Chinese imports from 10% to 25% which subsequently affected about $200 billion worth of goods per year. According to Trump at the time, the tariffs were intended to pressure China into negotiating better trade terms. However, the consequences were more of a disadvantage than an advantage to Nigeria and other developing nations.
We are in a new phase of global trade volatility driven by the return of Donald Trump, which elevates perceived national interest over the existing trade relationships that have brought prosperity to much of the world over the last several decades. While countries look at ways to mitigate the effects of this protectionism, in the short and medium term it is consumers in many countries that will bear the brunt.
For countries like Nigeria which rely heavily on imports from the U.S. and China, the impending tariff war presents significant economic risks. From potential trade restrictions to fluctuating commodity prices and capital outflows, the global market must prepare for a turbulent economic landscape.
By implementing smart policy adjustments, ramping up multilateral alliances, diversifying trade partners, and leveraging regional cooperation; Nigeria can mitigate the impact and position itself for long-term resilience. Nigeria has a huge chance to harness the abundant opportunities inherent in its agriculture, creative industry, and technology sectors and position itself as a leading value driver in the global market, while also taking advantage of the Africa Continental Free Trade Area (AfCFTA) to maximise trading opportunities in the continent.
Trump’s tariffs are making the U.S.-China trade more expensive. This could force China to diversify its suppliers—a potential opening for Nigeria’s non-oil exports. China has been a key market for Nigerian agricultural products, solid minerals, and manufactured goods. If Chinese manufacturers face higher costs due to U.S. tariffs, they may start sourcing more raw materials and goods from alternative markets including Nigeria. However, Nigeria must be ready to seize this opportunity by improving its logistics, production quality, and trade agreements. Without this, other nations—like Vietnam or Indonesia—could take advantage of China’s demand instead.
On the geopolitical front, President Donald Trump remains a key figure with considerable influence. His potential role in brokering peace in Ukraine and the Middle East could have far-reaching economic effects. A resolution in these regions would stabilise global commodity markets, allowing Russia to increase oil and Ukraine grain exports. This could drive down energy prices, reducing inflationary pressures and making essential goods more affordable worldwide. However, such a development could also pose a challenge for economies like Nigeria, which have based their foreign exchange (FX) revenue projections on oil prices around $75 per barrel. A significant drop in oil prices could destabilise fiscal planning and revenue expectations
In light of these evolving dynamics, experts said that African governments must be proactive in preparing for potential economic shocks. This includes diversifying trade partnerships, strengthening domestic production capabilities to reduce import dependence, and ensuring fiscal resilience to withstand fluctuations in oil prices and donor funding. Other insulators are; building foreign exchange reserves to cushion against capital flight; and negotiating bilateral trade deals with alternative partners to bypass US-China tensions. Experts have also advised developing countries to engage with global trade organisations like the World Trade Organization (WTO) and the United Nations Conference on Trade and Development (UNCTAD) to negotiate fair trade terms and seek exemptions from harsh tariff measures. By taking these strategic actions, Africa can turn these global disruptions into opportunities for long-term economic stability and growth.
Nigeria’s position as a regional power in West Africa makes it a valuable partner for the U.S. in counterterrorism, economic development, and regional stability. However, Trump’s transactional approach to diplomacy demands that Nigeria demonstrate clear benefits to the U.S. in any engagement. It is crucial to reaffirm strategic importance and highlight Nigeria’s role as a stabilizing force in West Africa while diversifying diplomatic ties and strengthening relationships with other global powers, such as the EU and China to reduce reliance on U.S. support.
