Impact of Trump Tariffs Regime on Nigeria's Economy and Policy Recommendations for the National Assembly
Working Paper
The Trump-era tariffs pose a significant challenge to the Tinubu Administration's efforts to diversify Nigeria's economy and promote sustainable growth. The immediate impact of the 14% tariff is a potential disruption to Nigeria's trade relationship with the United States, being one of its key trading partners. This tariffs regime could undermine the competitiveness of Nigerian goods, particularly in sectors that rely on price competitiveness and market access. This is concerning, given that Nigeria's exports to the U.S. have averaged $5-6 billion annually in recent years. While crude oil and mineral fuels constitute a significant portion (over 90%) of these exports and are exempt from the tariff (with the exception of crude oil), the non-oil sector, which the President Tinubu Administration is actively seeking to diversify, faces substantial risks. The tariff could lead to a decline in demand for Nigerian non-oil exports, such as urea, cocoa beans, and refined lead. This decline in demand may have devastating effects on the Nigerian economy. Firstly, it could reduce revenue from exports , putting pressure on Nigeria's foreign exchange reserves. Secondly, it could lead to decreased production in the affected sectors, potentially resulting in job losses and economic contraction. Thirdly, it could harm the growth prospects of small and medium-sized enterprises (SMEs) that are heavily reliant on exports to the U.S. Based on this state of affairs, the following recommendations are made: i. The National Assembly has a critical role to play in supporting the administration's response and mitigating the adverse effects of these tariffs. ii. By enacting appropriate legislation, investing in infrastructure, strengthening trade agreements, and providing support to affected industries, the National Assembly can help to safeguard Nigeria's economic interests and promote long-term prosperity.