Nigeria is bracing for a potential blow to its economy as U.S. tariffs—triggered by accusations of unfair trade practices—coincide with a sharp drop in global oil prices, threatening the revenue lifeline of Africa’s largest oil producer.
The Trump administration’s recent 14% tariff on Nigerian goods, announced under its “Liberation Day” policy shift, officially took effect Wednesday. While oil and gas exports remain exempt from the tariffs, the move has indirectly contributed to a dip in oil prices, intensifying concerns about Nigeria’s already fragile fiscal balance.
Oil Prices Tumble to Four-Year Lows
As global markets react to the U.S. trade offensive, crude oil prices have fallen to near $60 per barrel, marking their lowest levels in four years. The decline reflects fears of a potential global recession, spurred in part by escalating trade tensions.
For Nigeria—where oil accounts for 90% of foreign exchange earnings—the consequences are dire. The federal government’s 2025 budget of $37 billion, including an $8 billion deficit, was built on the assumption that oil prices would average $75 per barrel.
“It’s the price effect—the oil price effect—that may affect Nigeria,” Finance Minister Wale Edun said, acknowledging that while the U.S. tariffs don’t target oil directly, the broader market impact could hit Nigeria’s bottom line.
Trade Snapshot: Growth, Deficits, and Dependencies
According to the Observatory of Economic Complexity (OEC), trade between Nigeria and the U.S. has grown at an annualized rate of nearly 3% over the past five years. In 2024, bilateral trade totaled $9.9 billion, but the U.S. posted a $1.5 billion goods trade deficit with Nigeria—fueling criticism from the U.S. Trade Representative.
Nigeria has long benefited from the African Growth and Opportunity Act (AGOA), a 25-year U.S. trade initiative that grants duty-free access to eligible African countries. Nigeria was the largest AGOA exporter in 2023, with $3.8 billion in exports—though only $200 million came from non-oil goods.
However, the future of AGOA is now uncertain. The current pact is due to expire this September, and many believe the Trump administration’s new tariff agenda signals its likely demise.
Non-Oil Sector Vulnerability and Urgent Diversification
While Nigeria has long aspired to diversify its economy, meaningful progress has been elusive. Now, the spotlight is back on the non-oil sector, as the country faces growing pressure to broaden its export base.
Trade Minister Jumoke Oduwole warned that Trump’s tariffs could undermine market access and price competitiveness for Nigerian goods outside the oil sector.
“These tariffs present destabilising challenges,” Oduwole said. “This moment highlights the need to strengthen quality control and traceability to gain access to new global markets.”
Mixed Forecasts: Not Everyone Sees a Crisis
Not all analysts are sounding the alarm. Mark Bohlund, a credit research analyst at REDD Intelligence, believes Nigeria may not experience widespread fallout. He argues that Nigeria—like Angola—relies almost entirely on oil exports to the U.S., which can be easily redirected to other markets.
“So I don’t think there will be a wider impact,” Bohlund said.
However, while rerouting oil may offer a short-term buffer, Nigeria’s overdependence on a single commodity, volatile pricing, and weak currency reserves expose deeper vulnerabilities in its economy.
Conclusion: A Wake-Up Call for Nigeria’s Economy
As the Trump administration accelerates its global trade confrontation, Nigeria stands at a crossroads. With oil prices plunging and preferential trade access under threat, the urgency for economic diversification has never been more real.
The moment demands strategic reforms, stronger trade standards, and investment in non-oil industries—not just to weather the current storm, but to secure Nigeria’s place in a rapidly evolving global economy.
