Nigeria and the broader African economy are facing the ripple effects of a looming global trade war as former U.S President, Donald Trump moves to enforce steep tariffs on imports from Canada, Mexico, and China.
The United States will begin implementing a 25% tariff on goods from Mexico and Canada, alongside an additional 10% tariff on Chinese imports.
In response, Canada and Mexico have announced retaliatory tariffs, while China has vowed to challenge the move at the World Trade Organization (WTO), calling it a violation of international trade rules.
According to the White House, the tariffs aim to address illegal immigration, curb drug trafficking, boost domestic manufacturing, and increase federal revenue.
Trump, in a statement, cited the International Emergency Economic Powers Act as the legal basis for his actions, emphasizing the need to protect American citizens from illegal drug imports, particularly fentanyl.
Canada’s Prime Minister, Justin Trudeau, announced immediate countermeasures, imposing 25% tariffs on $155 billion worth of American goods in two phases.
Meanwhile, Mexican President Claudia Sheinbaum dismissed the White House’s claims about Mexico’s alleged links to criminal organizations and instructed her government to draft a response that includes both tariffs and other economic measures.
For Nigeria and other African nations, the consequences of these trade policies could be severe, given their limited ability to retaliate or absorb external economic shocks.
Oil Market Disruptions:
- Nigeria’s economy, heavily reliant on oil exports, is at risk of a downturn as Trump pushes for increased U.S. crude oil production. This move could lead to an oversupply in global markets, causing crude oil prices to plummet. Trump has also signaled plans to impose tariffs on imported oil and gas, potentially affecting Nigeria’s energy sector.
- Restrictions on AGOA Benefits: The African Growth and Opportunities Act (AGOA), which has allowed Nigerian and other African exports to enter the U.S. at reduced tariffs for over 15 years, faces uncertainty. Although a renewal was scheduled for last year, it was postponed due to congressional delays. Trump has now indicated that he is unlikely to support its extension, effectively shutting down a key trade window for African economies.
- Decline of African Specialty Stores in the U.S.:
The potential restrictions on AGOA could also impact African-owned businesses in the U.S., particularly the “African Shops” sector, which generates over $15 billion annually. These stores stock agricultural and food products sourced primarily from Nigeria and other African countries. Without AGOA, the cost of importing these goods will rise, threatening the survival of these businesses.
With no clear strategy in place to counter these economic challenges, Nigeria and other African nations are left vulnerable to shifts in U.S. trade policies.
As the global economic landscape changes, African leaders may need to explore alternative markets and strengthen intra-African trade to reduce their dependence on Western economies.
