Trump’s Tariffs Will Significantly Affect Nigerian Manufacturers—Ajayi-Kadir

The Director-General of MAN, Mr Segun Ajayi-Kadir, in a statement noted that the US remained one of Nigeria’s most significant trade partners, accounting for approximately 7 per cent of its non-oil exports.

President Donald Trump had earlier slammed a reciprocal tariff on all trading partners with the US with Nigeria getting a 14 per cent share. Although, it recently made a pause to the tariffs for a 90-day period, the possible impact remains.

Mr Ajayi-Kadir said the new tariff regime directly threatened this trade dynamic, particularly as Nigeria projected an ambitious N55 trillion budget and was experiencing a downward trend in global crude oil prices.

According to him, the hike has come at a vulnerable moment when the country is just recovering from the impact of the government’s policy mix that has had negative effects on the manufacturing sector.

“Nigeria’s manufacturing sector, which contributed 8.64 per cent to the country’s Gross Domestic Product (GDP) in 2024, is one of the most predisposed sectors of the economy when it comes to trade policy shifts.

“The imposition of a 14 percent tariff on Nigerian exports significantly undermines the competitiveness of locally manufactured goods in the US market.

“Manufacturers who are exporters in agro-processing, chemicals and pharmaceutical, basic metal, iron and steel, non-metallic mineral products and other light industrial manufacturing rely heavily on the U.S. for market access.

“With increased costs for American buyers due to the tariffs, demand for Nigerian products is expected to decline,” he noted.

Mr Ajayi-Kadir stated that in addition to revenue losses, the new tariffs posed a significant disincentive to firms investing in value-added manufacturing.

He noted that over the past decade, manufacturers had made concerted and strategic efforts to support the country’s transition from exporting raw commodities to semi-processed and finished goods.

“However, higher market-entry costs because of higher tariff on Nigerian products will reduce the profitability of such investments, making it more attractive for firms to revert to exporting raw materials.

“This is counterproductive to Nigeria’s industrialisation agenda and compromises the long-term goal of achieving export diversification under platforms such as the African Continental Free Trade Agreement (AfCFTA),” he said.

The MAN DG added that the implications of the tariff imposition on employment in the manufacturing sector were dire.

He noted that as export revenues fall, many companies may reduce their production scale or downsize their workforce to cut costs.

He added that beyond the manufacturing sector, the Nigerian economy was not insulated from the effects of the U.S. tariff decision with its direct impact on Nigeria’s trade balance.

Mr Ajayi-Kadir said with the country already grappling with a fragile external sector, any significant reduction in exports to the U.S. would erode the current trade surplus, potentially pushing the balance into deficit.

He expressed worry about potential pressure on Nigeria to reciprocate by reducing its own tariffs on U.S. goods.

He noted that while the U.S. may frame this as a step toward “fair trade,” the reality was that lowering tariffs on U.S. imports could flood the Nigerian market with subsidised goods, thereby undermining local producers.

“Nigeria has, in recent years, made commendable strides toward achieving self-sufficiency in several manufacturing segments and diversifying away from oil.

“However, succumbing to external pressures to liberalise trade prematurely would reverse these gains.

“Furthermore, the absence of institutional capacity to engage in sophisticated trade negotiations places Nigeria in a vulnerable position.

“While countries with advanced legal and economic institutions may be able to negotiate favourable terms, Nigeria is at a disadvantage due to capacity constraints,” he said.