Trump’s tariffs may have minimal impact on Nigeria’s us exports – Report

Nigeria’s exports to the United States account for about two per cent of the country’s Gross Domestic Product, according to a report by Renaissance Capital Africa.

The report, titled “The African Continent is (relatively) Immune to Trump’s Tariffs”, suggests that African countries, including Nigeria, may be less impacted by the US tariffs due to their diversified trade networks.

According to the report, Nigeria, Algeria, and Angola could feel some effects of the tariffs due to their oil exports.

However, unlike manufactured goods that may struggle to find new markets, crude oil is in global demand and can be redirected if the US market becomes less attractive.

Renaissance Capital Africa noted that the US runs the largest trade deficits with Africa’s top commodity exporters.

Over half of South Africa’s exports to the US consist of precious metals, diamonds, jewelry, and platinum, while Nigeria, Algeria, and Angola mainly export oil.

The report indicates that the US does not significantly trade with Africa, importing $39bn worth of goods from the continent in 2024.

This figure is roughly equivalent to what the US imports from Mexico or Canada in just over a month.

In fact, the US imports more from Mexico or Canada in a single day (over $1bn) than it does from around 40 African countries in a year.

However, South Africa and Nigeria stand out as exceptions, accounting for over half of all US imports from Africa.

The report read, “The US does not trade much with Africa. It imported $39bn of goods in 2024, which is roughly what it imports from Mexico or Canada in just over a month. The US imports more in 24 hours from either of them (over $1bn a day), than it imports in a year from about 40 African countries.

“The biggest exceptions are South Africa and to some extent Nigeria, which account for over half of everything the US imports from the continent.”

It further disclosed that Nigeria alone represents 14 per cent of African exports to the US.

Despite this, the US remains a minor trading partner for Nigeria, with only 9 per cent of the country’s total exports heading to the US market.

Renaissance Capital Africa estimates that a 10 per cent tariff on Nigerian exports to the US would have minimal economic effects.

A potential 5 per cent drop in exports would reduce Nigeria’s GDP by approximately 0.1 per cent.

In contrast, Lesotho, which derives 10 per cent of its GDP from US exports, would experience a 0.5 per cent GDP reduction

South Africa, with a 4 per cent GDP exposure to US exports, would face a 0.2 per cent GDP drop.

The report also highlights that US retailers and exporters could mitigate the tariff impact by cutting margins by 2 to 3 per cent.

Additionally, a possible five per cent depreciation of the naira against the US dollar could cushion the negative effects.

The report read, “We can be more bearish and suggest 10 per cent tariffs cut exports to the US by five per cent and being extra bearish, assume that countries cannot re-direct their exports elsewhere.

“For Lesotho, that would cut GDP by about 0.5 per cent, but it is an extreme and unlikely scenario. For South Africa, that would be an impact worth 0.2 per cent of GDP (5 per cent of the 4 per cent of GDP figure above).

“For Nigeria, the impact would be half this at 0.1 per cent of GDP. But this is surely an exaggeration, because Nigerian oil can be sold elsewhere.”

One key factor reducing the impact on Nigeria is the flexibility of oil exports. Unlike niche manufactured goods that may lack alternative markets, crude oil is widely traded and can be redirected to other countries if the US reduces purchases.

This global demand for oil helps mitigate potential economic shocks from US tariffs.

Oil-exporting countries like Nigeria often have multiple trade partners, enabling them to swiftly reroute shipments if faced with trade restrictions.

As global energy demand remains robust, the report suggests that Nigeria’s economic stability would not be significantly affected.

The report also discusses the potential indirect impacts of US tariffs on global trade. If the US increases tariffs on China or the European Union, the resulting slowdown could reduce energy demand and push oil prices down.

However, the report points out that global trade usually adapts to such changes, citing how China replaced US soybeans with imports from Brazil despite longer shipping routes.

While the Trump administration’s tariff strategy on commodity-rich countries could have unintended effects, Renaissance Capital maintains that Nigeria’s diverse oil export network and the sustained global demand for crude oil reduce the risk of significant economic disruption.

US President Donald Trump recently announced a baseline 10 per cent tariff on all US imports, along with targeted reciprocal tariffs on countries imposing higher duties on American goods.

Nigerian exports to the US will now attract a 14 per cent tariff, compared to the 27 per cent that the US government claims it receives from Nigeria.

Between 2015 and 2024, Nigeria’s trade with the US amounted to a combined N31.1tn, according to the National Bureau of Statistics.

Total imports during this period were valued at N16.4tn, representing 8.7 per cent of Nigeria’s global exports.