17 hours Ago By Guardian Nigeria
• Yusuf: Nigeria’s foreign reserves, revenue threatened • Africa need not panic, Renaissance insists From tomorrow, Nigeria’s exports to the United States will attract a 14 per cent tariff, about half of 27 per cent Nigeria charges on goods originating from the U.S., in a new trade regime that is already viewed as a major threat to the global economy.
Other African countries would also pay different percentages of the values of their merchandise as tariffs with South Africa, which has the highest trade surplus with the U.S., expected to pay 30 per cent to access the American market.
Opinions are divided on how the rash decision by President Donald Trump, who seems determined to bridge the revenue gap created by tax cuts with tariff windfall, would affect Nigeria and other fragile African economies. If the country’s exports are adversely affected, some economists have warned, the moderately stable foreign reserves and public revenue could take a serious hit. But Renaissance Capital Africa said African countries do not have sufficient trade ties with the biggest world economy to be worried about.
Besides, the White House said commodities, which are mostly imported from Africa, would be exempted from the new tariff regime. The U.S.
much-desired industrial renaissance would need to be powered by commodities sourced from the African market. The commodities have kept global industrial machines such as China, Europe and America itself running. ACCORDING to Renaissance Capital Africa, Nigeria has no reason to be overly worried as the U.
S. does not trade much with Africa, importing just $39 billion of goods from the country in 2024, roughly what the former imports from Mexico or Canada in a month. The U.
S. imports more in 24 hours from Canada or Mexico (over $1 billion) than it imports in a year from about 40 African countries, with the biggest exception being South Africa and to some extent, Nigeria, the group said. African governments see indecisive in the wake of the trade tariffs and regional realignment.
Whereas many are yet to respond, South Africa said the sweeping changes call for renegotiation with the super power. For most African countries, the trade numbers with the U.S.
are extremely low such that the country accounts for just two per cent or less of total exports of many of the African countries. Nigeria’s exports to the U.S.
have declined over the years as the U.S. buys less of Nigeria’s crude oil, which is Nigeria’s major export.
For many African countries, China has emerged as a bigger trading partner in recent years. Reacting to this development, the Chief Executive Officer (CEO) of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the vulnerability of the Nigerian economy to shocks of the current trade war unleashed by Trump will be very limited. Averagely, he said Nigeria’s external trade exposure to the U.
S. is just about 10 per cent. “In 2024, Nigeria’s total merchandise export was valued at 50.
4 billion dollars and Nigeria’s export to the U.S. in the same year was 5.
7 billion dollars or 11.3 per cent. “Nigeria’s major exports to the U.
S. are crude oil, petroleum gas and nitrogenous fertiliser while major U.S.
exports to Nigeria are vehicles, wheat and fuels. “Other major export destinations for Nigeria’s products are Spain, France, Netherlands and Italy. Oil and gas products account for close to 90 per cent of our exports, and this has been the case for about three decades,” he said.
Noting that the economy may, however, be affected indirectly in some other ways, Yusuf said the Trump administration has practically closed the AGOA trade window. “Secondly, the trade war and subsequent retaliatory tariffs would trigger inflationary pressures in the U.S.
, resulting in elevated costs for imports into Nigeria from there. “Also, 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 price, and a decline in oil price would impact Nigeria’s reserves and revenue,” he noted.
He added that the worsening inflation outlook for the U.S. economy may trigger monetary tightening by the Federal Reserve, leading to higher interest rates and portfolio flow reversals in emerging economies.
“This could have implications for the naira exchange rate. However, 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,” he said.
REACTING to the steep tariff, Director-General of the World Trade Organisation (WTO), Dr Ngozi Okonjo-Iweala, said her team is closely monitoring and analysing the tariff measures announced by the U.S. and will act subsequently.
Speaking through a statement, she said many members have reached out to the body, which was founded on global free trade ideals, and that it is actively engaging in response to questions about the potential impact on economies and the global trading system. “I am deeply concerned about this decline and the potential for escalation into a tariff war with a cycle of retaliatory measures that lead to further declines in trade. It is important to remember that, despite these new measures, the vast majority of global trade still flows under the WTO’s MFN terms.
Our estimates now indicate that this share currently stands at 74 per cent, down from around 80 per cent at the beginning of the year. WTO members must stand together to safeguard these gains. “Trade measures of this magnitude have the potential to create significant trade diversion effects.
I call on members to manage the resulting pressures responsibly to prevent trade tensions from proliferating. The WTO was established to serve precisely in moments like this, as a platform for dialogue, to prevent trade conflicts from escalating and to support an open and predictable trading environment. I encourage members to utilise this forum to engage constructively and seek cooperative solutions,” she urged.
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