‘US Tariff May Slow Nigeria’s Economic Growth Prospects’
Nigeria’s economic growth prospects in 2025 face a potential slowdown due to a newly imposed 14 per cent reciprocal tariff by the United States on Nigerian imports.
This was indicated in the latest ‘Nigeria Economic Outlook – April 2025’ report by PwC.
The tariff, part of a broader set of measures dubbed the “Liberation Day Tariffs” by the US, is designed to address trade imbalances through reciprocal actions. However, US President Donald Trump has ordered a 90-day pause on its implementation.
According to renowned economist and Managing Director of Economic Associates, Dr Ayo Teriba, Trump may not return to the tariffs due to the impact on the American economy and people.
Over a chat, Teriba said, “I don’t think he’s going to come back to it ever, unless he wants the American economy to collapse. America is the biggest debtor in the world. The people he is imposing tariffs on are some of their biggest creditors.”
Meanwhile, the PwC report highlights that this 14 per cent levy could significantly impact Nigeria’s trade dynamics with the US, potentially hindering the projected marginal Gross Domestic Product growth of 3.4 per cent for 2025.
This tariff could make Nigerian exports to the US less competitive, potentially leading to reduced export volumes and lower earnings for Nigerian farmers and exporters in sectors like agriculture.
The Manufacturers Association of Nigeria estimates this could erase approximately N2tn from Nigeria’s annual agricultural exports.
The US move comes amidst existing concerns regarding the future of the African Growth and Opportunity Act, a preferential trade programme that has allowed eligible African nations, including Nigeria, to export thousands of products to the US duty-free.
In 2024, Nigeria was the second-largest exporter to the US under AGOA, with exports valued at $1.76bn. A significant portion of these exports includes crucial sectors such as oil and agricultural products.
The report specifically points out that the 14 per cent tariff is likely to make Nigerian agricultural products more expensive for American consumers, leading to a potential decrease in demand and reduced export volumes. This could translate to lower earnings for Nigerian farmers and exporters.
While the oil and gas sector is currently exempt from the reciprocal tariff, PwC suggests that increased US domestic oil production plans could lead to reduced demand for Nigerian crude oil, which constituted a substantial 88.9 per cent of Nigeria’s exports to the US in 2024.
A combination of tariffs on non-oil exports and potentially reduced oil demand could significantly impact Nigeria’s foreign exchange earnings.
As an import-dependent nation, with imports accounting for 43.8 per cent of total trade as of December 2024, Nigeria could also experience rising costs of imported inputs due to broader US trade policies causing global supply chain disruptions. This would drive up production and operational expenses for local manufacturers, further exacerbating domestic inflation.
The PwC report outlines several ways in which these US policies, including the 14 per cent tariff, could negatively impact Nigeria’s overall GDP growth.
“Lower demand for Nigerian exports due to the tariff and potential loss of AGOA benefits may lead to a decline in foreign exchange inflows, affecting the stability of the naira. Tariffs on goods from other countries, driven by US protectionist policies, could raise the cost of imported goods, including machinery and raw materials, impacting Nigerian businesses and contributing to inflation.”
The report notes that rising protectionism and global policy uncertainty may reduce global Foreign Direct Investment flows, making investors more cautious about emerging markets like Nigeria.
The Nigeria Economic Outlook – April 2025 report emphasizes the need for strategic responses from the Nigerian government and businesses.
These responses include, “Advocate for extension and improved concessions under the African Growth and Opportunity Act to expand Nigerian export opportunities. Expand alliances beyond the US. Promote Nigerian exports across Africa by leveraging AfCFTA to target key markets for Nigerian-made goods and explore trade agreements with more countries to reduce dependency on a few partners.
“Boost non-oil exports and domestic production. Boost non-oil export by supporting agro-processing, solid minerals, and light manufacturing through targeted export incentives and introduce incentives for producing key inputs locally, especially those previously.”
The experts also urged the Federal Government to “Mobilise long-term infrastructure financing via issue long-tenure infrastructure bonds to raise capital for large-scale public projects. Strengthen Infrastructure Investment and provide investment guarantees and legal protections to attract credible private sector participation.
“Maintain a clear, transparent pipeline of viable projects to guide investor interest and facilitate funding. Ensure infrastructure deals are structured around clear, fair risk allocation between the public and private sectors to enhance project bankability. Use PPPs to build more seaports on the southern coast, especially in the Niger Delta and Southeastern states bordering the sea, similar to the Build, Own, Operate and Transfer Lekki Deep Sea Port in Lagos.”
