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US Tariff To Affect 10% Of Nigeria’s Export, 15% Of GDP – Afreximbank

by Bukola Aro-Lambo
4 months ago
in Business
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The African Export-Import Bank (Afreximbank) has warned that the United States reciprocal tariffs, announced under the Trump administration, could hit 10 per cent of Nigeria’s exports and impact as much as 15 per cent of its Gross Domestic Product (GDP).

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Afreximbank’s Monthly Developments in the African Macroeconomic Environment – April 2025 report noted that while crude oil, the backbone of Nigeria’s external trade, is exempted from the US tariffs, other sectors of the economy face significant exposure.

“Nigeria’s total export exposure to the United States is about 10.3 per cent, representing a potential GDP impact of 15.4 per cent,” the document stated. The bank cautioned that the imposition of the 10 per cent blanket tariff by the United States, alongside targeted levies of up to 50 per cent on selected African countries, poses a dual risk of trade disruption and investor hesitancy.

Although Nigeria’s crude oil may escape direct tariff impacts, secondary effects such as lower oil prices and reduced demand amid global economic realignments could affect export earnings. “The Trump administration’s policy shift signals a broader return to protectionism, which could adversely affect capital flows and heighten uncertainty in trade-sensitive sectors,” it stated.

The report also pointed out potential indirect spillovers, especially from China, a major buyer of Nigerian crude, noting that lower Chinese growth and trade retaliation against the US could have cascading effects on African economies like Nigeria, which are deeply embedded in global supply chains.

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The bank also observed that Nigeria’s fiscal space remains under strain, with the 2025 budget projecting a 3.89 per cent deficit. The US freeze on foreign aid, especially through the United States Agency for International Development (USAID), is compounding financing challenges for Nigeria and other fragile African economies.

Meanwhile, the report suggests that Nigeria and other African economies should leverage the current global trade turbulence to deepen intra-African trade, reposition supply chains, and build resilience through economic diversification.

Effective April 5, 2025, a 10 per cent global tariff was applied to imports from all countries, unless exempted or subject to higher rates. Additionally, reciprocal tariffs ranging from 11 to 50 per cent took effect on April 9, 2025, targeting 57 countries and trading blocs, including 21 African states.

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While Africa is stated to face minimal direct impact overall, certain regions and countries face severe exposure. Southern Africa is highlighted as severely exposed, with countries like Lesotho slammed with 50 per cent tariff, Madagascar with 47 per cent and South Africa with 30 per cent having significant portions of their exports to the US at risk, affecting sectors like apparel, vanilla, and automotive.

East Africa also faces high exposure, with Kenya and Ethiopia at 10 per cent having vulnerable textile and coffee exports. West Africa has mixed exposure, but the 21 per cent tariff on cocoa from Côte d’Ivoire poses an inflationary risk to the global chocolate supply chain. Even North Africa, despite minimal direct trade impact due to oil exemptions, faces indirect risks to investor confidence and supply chains.

Lesotho is specifically noted as seeking engagement with the US regarding the “shocking” tariffs. Nigeria’s central bank sold nearly $200 million to support the naira following a sharp selloff triggered by these tariffs, which also threaten Nigeria-US trade worth $10 billion. Namibia was also hit with a 21 per cent tariff. This complex situation involving direct tariffs, exemptions for key commodities like oil and minerals, and indirect risks presents a significant news story about trade tensions and their uneven impact across the continent.

 

 


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