The Nigerian Economic Summit Group (NESG) has raised concerns that U.S. President Donald Trump’s tax reforms may lead to a reduction in Foreign Direct Investment (FDI) in Nigeria.
According to NESG’s report titled Trump’s Policy Playbook: Strategic Implications For Nigeria, released in February 2025, Trump’s tax policies may encourage U.S. firms to repatriate investments, thereby reducing capital inflows into Nigeria.
According to NESG, “Trump’s tax reforms may encourage U.S. firms to repatriate investments, reducing FDI in Nigeria. To counter this, Nigeria should attract investors from China, the EU, and Gulf nations by improving its investment climate.”
The report highlighted that Nigeria must proactively attract investors from alternative markets such as China, the European Union (EU), and Gulf nations by improving its investment climate.
NESG further noted, “Nigeria, as one of Africa’s largest economies, faces potential trade disruptions due to increased U.S. protectionism. Tariff hikes on key commodities could reshape global supply chains and disrupt international trade. The future of AGOA, set to expire in September 2025, remains uncertain under Trump’s second term, especially given his less focus on Africa during his first term. However, if AGOA is renegotiated or its benefits reduced, it could impact trade in Nigeria, as the US remains one of the country’s top five export destinations for oil and agricultural products.”
NESG’s report also points out that potential tariff hikes and trade restrictions could create significant challenges for Nigerian businesses exporting to the U.S. market. Industries dependent on exports to the U.S., such as oil, cocoa, and textiles, may suffer revenue losses if stricter trade policies are implemented.
To mitigate the risks posed by Trump’s economic policies, NESG recommends that Nigeria diversify its trade partnerships, enhance its manufacturing capabilities, and implement policies that support local industries. Strengthening ties with Asian and European markets, while fostering intra-African trade under the African Continental Free Trade Area (AfCFTA), could serve as a buffer against potential economic shocks.
From a standard trade theory perspective, tariffs act as taxes on imports, raising their domestic prices, the NESG noted.