Tariff Cut On Vehicles, Rice, Others To Weaken Local Products – Economist Warns

Stakeholders have expressed concern over the Federal Government’s approval of the 2026 Fiscal Policy Measures (FPM), warning that planned reductions in import tariffs on vehicles, rice and other goods could weaken local production and threaten domestic industries.

The policy, which introduces significant tariff adjustments, is widely viewed by experts as a delicate balancing act with mixed implications for the economy.

On one hand, the measures are expected to bring relief to consumers by lowering the cost of essential goods, particularly food items. Early market signals already indicate a downward trend in prices, with some rice dealers reportedly slashing prices by as much as N20,000 per bag in anticipation of increased supply.

However, industry stakeholders caution that the benefits to consumers may come at a steep cost to local producers.

They argue that increased importation could undermine efforts to boost domestic manufacturing and agriculture, potentially leading to job losses as local industries struggle to compete with cheaper foreign goods.

Speaking to the issue, the chief executive officer, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, warned that an influx of cheaper imported rice and palm oil could undercut local farmers, discouraging investment in domestic agriculture.

According to him, Nigeria risks substituting local labour with imported goods, thereby limiting job creation opportunities within the country.

Yusuf further stressed that long-term food security should not rely on imports but on reducing the cost of production inputs such as fertilisers and improving support for local farmers.

To offset potential revenue losses from the tariff cuts, the Federal Government is set to introduce new fiscal measures, including a Green Tax surcharge as well as excise duties on alcohol, tobacco and sugary drinks, scheduled to take effect from July 1, 2026.

Analysts note that while the policy may ease pressure on importers and businesses grappling with high costs, Nigeria’s economy still faces a complex path to stability. Rising energy prices and persistent structural challenges continue to keep inflation elevated, with experts warning that additional tax measures later in the year could pose fresh hurdles.

Overall, stakeholders maintain that while the tariff reductions may offer short-term relief to consumers, they could weaken local industries if not complemented by strong policies that support domestic production.