Trump Tariffs: Nigeria one of 48 countries that has trade deficits with the US
Nigeria is one of the 48 countries that has a trade deficit with the United States of America, a major trading partner of one of Africa’s largest economy.
This information is critical as U.S. President Donald Trump wages an economic war on some of its closest allies and largest trade partners.
In a significant move that has jolted global trade dynamics, President Donald Trump imposed substantial tariffs on imports from Canada, Mexico, and China, citing concerns over illegal immigration and the influx of drugs like fentanyl into the United States.
Effective February 4, 2025, a 25% tariff will be levied on all goods from Canada and Mexico, while a 10% tariff will be imposed on Canadian oil exports and Chinese goods.
This policy shift has prompted immediate retaliatory measures. Canadian Prime Minister Justin Trudeau announced matching 25% tariffs on up to C$155 billion worth of U.S. imports, emphasizing the deep historical ties between the two nations.
Mexico is also considering similar countermeasures, while China has vowed to implement corresponding actions, potentially affecting electronics and apparel markets.
While Nigeria is not directly targeted by these tariffs, its trade relationship with the U.S. warrants close examination.
Nigeria’s Trade Relationship with the U.S.
According to 2024 U.S. trade data, Nigeria exported approximately $5.29 billion worth of goods to the U.S. while importing about $3.88 billion, resulting in a trade surplus of $1.4 billion in Nigeria’s favor. Total trade as of September 2024 is $9.1 billion.
- In 2023, total trade between Nigeria and the U.S. amounted to $8.27 billion. However, Nigeria maintained a trade surplus of $3.1 billion, exporting more to the U.S. than it imported.
- Trade volumes between both countries have fallen by as much as 73% in the last decade, primarily due to the U.S.’s drastic reduction in crude oil imports from Nigeria.
- A historical review of trade data shows that in 2011, total trade between Nigeria and the U.S. was $74 billion, with Nigeria enjoying a trade surplus of $14 billion.
- Comparatively, total trade between 2005 and 2014 reached $281.7 billion, during which Nigeria ran a massive trade surplus of $200.2 billion with the U.S.
Despite this decline, the United States remains a critical trade partner for Nigeria. U.S. foreign direct investment (FDI) in Nigeria is concentrated largely in the petroleum, mining, and wholesale trade sectors. Additionally, Nigeria remains the second-largest U.S. export destination in Sub-Saharan Africa.
- U.S. exports to Nigeria include vehicles, wheat, machinery, fuels, and plastics, while Nigerian exports to the U.S. comprise crude oil, cocoa, cashew nuts, and animal feed.
- Moreover, multiple U.S.-based film and entertainment companies operate in Nigeria, highlighting the significant export potential of Nigeria’s creative industries.
Nigeria also benefits from preferential trade agreements such as the African Growth and Opportunity Act (AGOA).
The “Nigeria-Next” Approach
A recent Nairametrics article highlighted how Trump’s America First administration presents an opportunity for Nigerian policymakers to adopt a “Nigeria-Next” approach.
- This strategy would involve a thorough evaluation of Nigeria-U.S. bilateral relations to ensure alignment with both U.S. and Nigerian interests.
- Economic indicators suggest that Nigeria’s trade performance from 2020 to 2023 could have been significantly stronger when compared to the earlier part of the previous decade (2014 to 2019).
- Nonetheless, proactive measures can be implemented now to revitalize and expand Nigeria-U.S. economic ties.
- Even restoring trade volumes to pre-2020 levels would represent a significant milestone. Increased capital investments, expanded trade, and enhanced diaspora remittances would boost foreign exchange (FX) inflows, strengthen the naira, and ultimately benefit Nigerians.
By leveraging these opportunities, Nigeria can strategically position itself in the evolving global trade landscape and maximize its economic gains from U.S. trade policies.
Just recently, Minister of Industry, Trade and Investment, Mrs. Jumoke Oduwole, has said that Nigeria is not worried by the policies of the recently sworn-in President Donald Trump of the United States of America.
Nigeria has also reacted to the ongoing tariff war between the governments of the United States of America and Canada.
Sunday Dare, the Special Adviser on Media and Public Communications to President Tinubu stated that there “will reverberate around the world” and that the World Trade Organization will have to manage the impact on the emerging global order.
“There is a lesson in all of this for us as a country. We are witnessing a new movement: America First. Canada First. It’s time for Nigeria First! Let’s put Nigeria first no matter what.”
