ANALYSIS: How Trump Trade War with China is Hurting Nigeria’s Economy

On April 2, 2025, United States (US) President Donald Trump jolted world trade and markets with his so-called ‘Liberation Day’ reciprocal tariffs. As part of the Trump trade war, he imposed 14% “reciprocal” tariffs on exports from Nigeria.

Although by Wednesday, April 9, 2025, he had paused the “reciprocal” tariffs on Nigeria and other countries after a drastic selloff in the stock market and rising fears of a recession in the US, he left a 10% across board tariff on all countries, except China which the US president slammed a 125% tariff on for retaliating.

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“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately,” Trump wrote on Truth Social.

Since then, there has been a back and forth increase in tariffs from both the US and China. The tit-for-tat tariffs are now at a staggering 145% on the US side and 125% on the Chinese side, sharply reshaping global supply chains, energy markets, and trade dynamics.

As Africa’s largest economy, Nigeria has not been spared from the sharp disruption in global trade with multiple sectors of the economy feeling its impact. Nigeria’s heavy reliance on crude oil exports—accounting for over 80% of its export earnings—makes it acutely vulnerable to global shocks.

In 2024, Nigeria exported $5.82 billion worth of oil to the US, making America one of its top buyers. But Trump’s aggressive push for energy independence, under the “National Energy Emergency” plan, has flooded the market with US oil. Combined with reduced global demand due to the trade war’s impact on industrial activity, this has driven down global oil prices.

For Nigeria, the consequences are severe. Lower oil prices mean reduced national revenue, budget shortfalls, and the curtailment of critical government services. The oil sector, already plagued by underinvestment and insecurity, faces the risk of job losses and declining foreign investment.

Although oil prices rose on Monday due to US tariff exemptions and an increase in Chinese imports, Nigeria is not out of the woods yet considering Trump’s unpredictability.

Tariff Spillovers and Inflationary Pressures

While Nigeria isn’t directly involved in the US-China conflict, it is caught in the crossfire. Both the US and China are major sources of Nigeria’s imports—particularly in areas like pharmaceuticals, electronics, and industrial machinery. The rising cost of imports, driven by disrupted global supply chains and tariff-fuelled inflation, will likely push up prices in Nigeria.

Inflation, already elevated due to structural economic issues and forex volatility, is now being stoked further. The Naira continues to weaken against the dollar, especially as the U.S. economy absorbs tariff revenues and strengthens its currency. For Nigerian consumers, this translates to higher prices for everyday goods and services. For businesses, especially manufacturers, the increased cost of imported inputs is squeezing already thin profit margins.

Furthermore, one of the few bright spots in US-Africa trade—the African Growth and Opportunity Act (AGOA)—is under threat. Trump’s second-term trade doctrine leans toward bilateral deals, casting doubt on AGOA’s future. For Nigeria, AGOA has allowed duty-free access for non-oil exports like textiles, leather, and agricultural products.

The imposition of a 14% (or 10% until at least after the 90-day pause) effective tariff on Nigerian exports to the US—amounting to an estimated $814.8 million annually—is a major blow. It reduces Nigeria’s competitiveness and puts thousands of jobs at risk in sectors that had begun to show promise outside of oil. If AGOA is terminated or weakened, Nigeria will lose one of its few pathways to diversify exports and integrate into global value chains.

In a recent interview with The PUNCH, the President, Nigerian-American Chamber of Commerce (NACC), Alhaji Sheriff Balogun, said Nigeria’s participation in AGOA has been heavily tied to oil exports, with non-oil exports (such as agricultural and manufactured goods) representing a tiny fraction of $277bn worth of goods Nigeria has exported under the trade act since 2000.

Balogun explained that a blanket 10 or 14 per cent tariff on Nigerian goods undercuts the duty-free access that AGOA currently provides.

“Over time, the tariff could lead US buyers to reduce orders from Nigeria or switch to alternative suppliers with duty-free access. In summary, the tariff undermines the core benefit Nigeria enjoys under AGOA – duty-free entry – and could negatively impact export revenues and diversification efforts,” he said.

Economic Fragility and the Road Ahead

As the US-China trade war exposes the Nigerian economy’s fragility, Nigeria’s Minister of Industry, Trade, and Investment, Dr. Jumoke Oduwole, said the West African country is insulated from the full effects of global trade disruptions, as Africa accounts for only 3-5% of global trade.

“Africa is kind of insulated from the global trade because we are less than 5%, like about 3% of global trade, so the players that really dominate, we don’t want their retaliation and then, we end up being collateral damage or the unintended consequences. So, that is really what the issue is and that’s what’s making headline news,” Oduwole explained in an interview with Arise News.

Nevertheless, the trade war is amplifying Nigeria’s existing vulnerabilities as oil price crashes could hurt the country’s economic streams. Also, if trade tensions persist, foreign direct investment (FDI) in Nigerian markets could be reduced as businesses in the Western economies will be focused on protecting their domestic industries.

Without bold policy action such as export diversification, support for non-oil local manufacturing, and trade deal renegotiation, Nigeria may face rising unemployment, deepening inflation, and slowed GDP growth. While agriculture may see temporary gains from redirected Chinese demand, it is unlikely to offset losses in other sectors without substantial investment.

In conclusion, Nigeria may not be a direct participant in Trump’s trade war, but it is undoubtedly one of its unwilling casualties. The dispute between the world’s two largest economies is distorting global markets in ways that hit vulnerable, oil-dependent economies the hardest. For Nigeria, this crisis may yet prove to be a turning point, either spurring a long-overdue transformation or worsening economic distress.

Nigeria’s Response

Meanwhile, the Federal Government’s Economic Management Team (EMT), chaired by the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, has established a sub-committee to conduct a detailed review of the direct and indirect economic impacts of emerging tariff measures and global commodity price shifts on the Nigerian economy.

The findings of the sub-committee are expected to support the government in crafting a coordinated response, helping to formulate evidence-based policies aimed at stimulating economic growth and insulating the nation from the adverse effects of the ongoing global trade tensions.

The EMT noted that although Nigeria’s major export, crude oil, has not been directly targeted, the accompanying drop in international oil prices is a source of serious concern to the administration.

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