United States-China Tariff War and Implications for Nigeria’s Economy

Abstract

This brief assesses the effect of the US – China tariff war on Nigeria’s economy with the aim of providing some policy recommendations aimed at lessening the negative repercussions of the tariff war on Nigeria. Global trade dynamics have been significantly disrupted by the intensifying trade war between the two countries, with devastating effects on rising economies like Nigeria. In addition to straining bilateral trade between the two heavyweights, the introduction of significant tariffs of between 145% and 245% by the United States and 125% retaliatory tariff by China has created economic uncertainty on a worldwide scale. This tariff war between the two countries has the potential of debilitating havoc on Nigeria's economic growth expectations given the volatility in oil prices, and raised inflationary pressures. It is worthy of note that these two countries are of importance to Nigeria as far as foreign trade is concerned; and for this reason, Nigeria has now found herself in a dilemma. In that, US is one of the largest export destinations for Nigeria while China remains the number one country from which Nigeria import. So, several of Nigeria’s oil and non-oil exports are set to face adverse effects due to the newly imposed tariffs by US President Donald Trump. The brief concludes with the following recommendations, among others: i. The National Assembly Committees on Industry may wish to organise a committee hearing with relevant stakeholders like the Federal Ministry of Trade and Investment to facilitate trade talks and see how the consequences of the tariff war could be reduced on the country; ii. National Assembly Committees on Foreign Affairs may explore dialogues with the representatives of both countries in order to strengthen trade relations; and iii. The above mentioned NASS committees may wish to also explore conversation with Manufacturers Association on Nigeria with a view to leverage the African Continental Free Trade Area (AfCFTA) as it offers a strong buffer against external trade shocks by reducing dependence on import from China and US, and creating new trade routes within Africa and elsewhere for Nigerian goods and services.