Nigeria’s economic growth in 2025 may experience a setback due to a newly imposed 14 percent reciprocal tariff by the United States on Nigerian imports. This is highlighted in the latest ‘Nigeria Economic Outlook – April 2025’ report released by PricewaterhouseCoopers (PwC).
The tariff is part of a broader set of measures, referred to as the “Liberation Day Tariffs,” introduced by the US to address trade imbalances through reciprocal actions. However, US President Donald Trump has decided to pause the implementation of this tariff for 90 days. Renowned economist and Managing Director of Economic Associates, Dr. Ayo Teriba, suggested that Trump may ultimately abandon the tariff due to its potential negative impact on the US economy. According to Teriba, imposing tariffs on major creditors could backfire, as it would hurt the American economy, which is already the world’s largest debtor.
The PwC report stresses that this new tariff could drastically alter Nigeria’s trade relations with the US, particularly in sectors like agriculture, and impede the projected 3.4 percent GDP growth rate for 2025. With Nigerian exports to the US becoming less competitive due to the tariff, Nigerian farmers and exporters in sectors such as agriculture may face reduced demand, leading to lower earnings.
The Manufacturers Association of Nigeria has estimated that the tariff could result in a loss of around N2 trillion from Nigeria’s annual agricultural exports. In 2024, Nigeria was the second-largest exporter to the US under the African Growth and Opportunity Act (AGOA), a trade programme that has allowed eligible African nations, including Nigeria, to send thousands of products to the US without facing tariffs.
A significant portion of Nigeria’s exports to the US includes oil and agricultural products. The PwC report highlights that the 14 percent tariff may make Nigerian agricultural goods more expensive for American consumers, potentially reducing demand. This could have a negative effect on the incomes of Nigerian farmers and exporters, as well as the broader economy.
While Nigeria’s oil and gas sector is exempt from this new tariff, PwC warns that increased domestic oil production in the US could lead to reduced demand for Nigerian crude oil. In 2024, crude oil accounted for a substantial 88.9 percent of Nigeria’s exports to the US. A decline in oil demand, combined with the tariff on non-oil exports, could significantly affect Nigeria’s foreign exchange earnings.
As an import-dependent nation, with imports making up 43.8 percent of Nigeria’s total trade in December 2024, the tariff could also lead to higher costs for imported goods. The broader US trade policies may disrupt global supply chains, further increasing the costs of imported inputs for Nigerian manufacturers. This could drive up production costs, exacerbating inflation within the country.
The PwC report identifies several potential risks posed by the US tariff, including a decline in foreign exchange inflows due to reduced export demand. This, in turn, could destabilize the naira. Increased tariffs on imports from other countries as a result of US protectionist policies could further raise the cost of goods, such as machinery and raw materials, affecting Nigerian businesses and contributing to inflation.
The report also notes that rising protectionism and global policy uncertainty may deter foreign direct investment (FDI) flows, making investors more cautious about emerging markets like Nigeria. As the US continues to implement these tariffs, Nigeria may face significant challenges in maintaining its economic stability.
To mitigate the potential negative effects of these tariffs, the PwC report urges the Nigerian government and businesses to take strategic actions. These include advocating for an extension and improvement of the AGOA programme to expand Nigerian export opportunities, seeking trade agreements with other countries to reduce dependency on a few partners, and promoting Nigerian exports across Africa through the African Continental Free Trade Area (AfCFTA).
The report also recommends boosting non-oil exports by supporting agro-processing, solid minerals, and light manufacturing through targeted export incentives. Nigeria could also introduce incentives for producing key inputs locally, particularly those previously reliant on imports.
Additionally, the experts suggest mobilizing long-term infrastructure financing via the issuance of infrastructure bonds for large-scale public projects. Strengthening infrastructure investments and ensuring transparent project pipelines could enhance investor interest, facilitating funding for projects. The government is also advised to prioritize public-private partnerships (PPPs) in the development of more seaports, particularly in the Niger Delta and Southeastern states, to improve Nigeria’s maritime infrastructure.
In conclusion, while the US tariff and broader trade policies pose significant challenges to Nigeria’s economic growth, strategic planning and proactive engagement by the Nigerian government could help mitigate the impact and strengthen the country’s trade relations in the coming years.