Nigeria and Africa are facing mounting external sector challenges, exacerbated by the aggressive trade policies of President Donald Trump, who has followed through on his threats to impose tough tariffs on a range of economies globally. The U.S. is set to implement new tariff measures on imports from Mexico, Canada, and China starting tomorrow, further escalating tensions and leading to retaliatory actions from these countries. These developments are poised to ignite a global trade war, with potential ripple effects felt across the globe.
The U.S. is set to impose a 25% tariff on imports from Mexico and Canada, as well as an additional 10% on Chinese goods. In response, Canada has already announced its own retaliatory measures, including tariffs on $155 billion worth of American goods, with the first phase kicking in tomorrow. Mexican President Claudia Sheinbaum has also indicated plans to introduce retaliatory tariffs and other measures to defend Mexico’s interests.
China, on its part, has announced that it will challenge the new tariffs at the World Trade Organization (WTO), asserting that the measures violate global trade rules. The White House has justified the tariffs as part of an effort to curb the flow of illegal immigration, combat illicit drug trafficking, and bolster domestic manufacturing. President Trump has further indicated that if any of these nations retaliate, the U.S. may escalate its tariffs to maintain the effectiveness of the order.
For Nigeria and the broader African continent, these developments could prove particularly damaging. Africa’s economies, including Nigeria’s, lack the internal resilience needed to withstand the pressures of a global trade war. With few options for retaliation, African nations are left vulnerable to the consequences of Trump’s trade actions.
One of the most immediate threats to Nigeria is the impact of Trump’s policies on global oil prices. The U.S. has plans to increase domestic crude oil production, which could lead to an oversupply on the global market and drive down oil prices. Given Nigeria’s heavy reliance on oil exports, this could exacerbate the country’s economic challenges. Additionally, President Trump’s announcement that the U.S. will impose tariffs on oil and gas imports starting in February 2025 could further complicate matters for Nigerian oil exporters.
Trump’s trade policies also threaten the African Growth and Opportunities Act (AGOA), a key trade agreement that has allowed African countries, including Nigeria, to export goods to the U.S. at preferential tariff rates. While AGOA was due for renewal last year, delays in Congress have pushed the issue to this year. However, President Trump has shown little support for the renewal of AGOA, and his administration’s stance on trade policy suggests that the window for beneficial trade terms with the U.S. may soon close for African nations.
The impact of these tariffs is also being felt in the U.S.-based “African Shops” industry, which stocks and sells goods imported from Africa, including agricultural products. Nigeria plays a significant role in supplying these items, and with Trump’s tariffs potentially driving up costs, the industry, valued at over $15 billion annually, could be negatively affected.
In light of these developments, Nigeria and other African countries are grappling with how to respond to the rapidly changing global trade landscape. For now, the region remains in a precarious position, with limited leverage to counter the effects of Trump’s economic policies.