The recent announcement of a 14 percent tariff on Nigerian products entering the United States has sent shockwaves across Nigeria’s trade and industrial landscape.
According to the Manufacturers Association of Nigeria (MAN), in a recent statement, this move, part of President Donald Trump’s ongoing global tariff policy, aims to pressure trade partners into renegotiating tariff regimes in favor of U.S. manufacturers.
However, the consequences for developing nations like Nigeria are profound and far-reaching.
The United States remains one of Nigeria’s most significant trade partners, accounting for approximately 7 percent of its non-oil exports.
In 2024, bilateral trade between Nigeria and the US stood at N9.59 trillion, representing 6.9 percent of Nigeria’s total trade volume.
Nigerian exports to the U.S. amounted to N5.52 trillion, while imports from the U.S. stood at N4.07 trillion.
Nigeria’s manufacturing sector, contributing 8.64 percent to the country’s GDP in 2024, is highly vulnerable to trade policy shifts.
MAN notes that the imposition of a 14 percent tariff on Nigerian exports significantly undermines the competitiveness of locally manufactured goods in the U.S. market as MAN members, who are exporters in various sectors, will be severely impacted.
MAN warns that processed agricultural goods like cocoa derivatives, sesame seeds, and ginger may witness a drop in export volume.
Firms in the chemicals and pharmaceuticals sector may lose their competitive edge in regional or global supply chains.
Higher market-entry costs reduce profitability, making it more attractive to export raw materials. Demand for Nigerian products is expected to decline due to increased costs for American buyers.
According to MAN, the tariff hike could potentially wipe out N1 to N2 trillion of Nigeria’s agricultural export revenue annually, which stood at over N4.42 trillion in 2024.
This will not only lead to revenue losses but also pose a significant disincentive to firms investing in value-added manufacturing.
MAN expresses concern that the implications on employment in the manufacturing sector are dire. As export revenues fall, companies may reduce production scale or downsize their workforce to cut costs, leading to potential job losses.
The broader economy will also be affected, with potential reduction in exports to the U.S. possibly pushing Nigeria’s trade balance into deficit. Drawdown of foreign reserves could put further pressure on the exchange rate.
MAN also notes that higher interest rates to control inflation may stifle domestic investment and exacerbate the cost-of-living crisis.
“The tariff hike will likely halt investor confidence in Nigeria’s economy, making it a less attractive proposition for foreign direct investment.”
In 2023, Nigeria’s manufacturing sector attracted over $1.6 billion in capital importations, which could decline significantly in 2025 if investor confidence is not restored.
MAN emphasizes that the asymmetry of the trade action undermines the spirit of international cooperation and disregards developmental needs of emerging economies.
Reducing tariffs on U.S. goods could flood the Nigerian market with subsidized goods, undermining local producers.
Premature trade liberalization may reverse Nigeria’s gains in achieving self-sufficiency in manufacturing segments and diversifying away from oil.
To mitigate these effects, MAN urges the Nigerian government to engage in robust policy responses to restore investor confidence and protect local industries.
The Manufacturers umbrella body noted that building institutional capacity to engage in sophisticated trade negotiations is crucial for Nigeria to negotiate favorable terms and safeguard its economic interests.
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