Nigeria’s economy could face slower growth in 2025 due to a new 14% reciprocal tariff by the United States on Nigerian imports. This is according to PwC’s “Nigeria Economic Outlook – April 2025” report. Although U.S. President Donald Trump has paused the tariff for 90 days, experts warn it may hurt Nigeria’s trade and export income. The levy is part of the U.S. “Liberation Day Tariffs,” a strategy aimed at fixing trade imbalances. Nigerian experts and business leaders are urging quick action to protect the country’s economic future.
What the US Tariff Means for Nigeria
The 14% tariff, if enforced, would apply to Nigerian goods entering the U.S. It aims to balance trade, but it could hurt Nigeria’s exports. Nigerian goods could become more expensive in the U.S. market, reducing demand. This is especially troubling for sectors like agriculture, where farmers rely heavily on exports.
PwC warns that Nigeria’s projected GDP growth of 3.4% in 2025 is at risk. The tariff could lead to a drop in export volumes and foreign income. The Manufacturers Association of Nigeria estimates that the tariff could slash up to ₦2 trillion from Nigeria’s annual agricultural exports.
Expert Insight: “It Could Hurt the US Too”
Economist Dr. Ayo Teriba, Managing Director of Economic Associates, believes the tariff may never fully take effect.
“I don’t think he’s going to come back to it ever, unless he wants the American economy to collapse,” Teriba said.
“America is the biggest debtor in the world. The people he is imposing tariffs on are some of their biggest creditors.”
Trump’s 90-day pause may reflect concerns about the impact on American consumers and industries. Yet, the uncertainty is already affecting Nigeria’s business outlook.
AGOA Benefits at Risk
The tariff also raises concerns about the African Growth and Opportunity Act (AGOA). This U.S. law allows many African nations, including Nigeria, to export thousands of goods to the U.S. duty-free.
In 2024, Nigeria was the second-largest exporter under AGOA, with exports totaling $1.76 billion. These exports include oil and agricultural goods, both of which are vital to Nigeria’s economy.
If AGOA benefits are lost or reduced, Nigeria may face even tougher export challenges in 2025 and beyond.
Oil Sector and U.S. Energy Independence
Currently, Nigerian oil is exempt from the new tariff. But PwC warns that rising U.S. oil production could cut future demand for Nigerian crude. In 2024, oil made up 88.9% of Nigeria’s exports to the U.S.
If oil exports fall alongside non-oil exports, Nigeria’s foreign exchange earnings could shrink. This may put pressure on the naira, affecting import costs and inflation.
Impact on Local Production and Inflation
Nigeria depends on imports for many goods and raw materials. In 2024, imports made up 43.8% of the country’s total trade. If U.S. tariffs lead to broader trade tensions, global supply chains could be affected. This could increase the cost of inputs for Nigerian manufacturers.
As a result, production costs may rise, leading to higher prices for local consumers. PwC warns that this would add to Nigeria’s domestic inflation, already a challenge for many households.
Risk to Investment and Currency Stability
The PwC report also highlights risks to investment and currency stability. A drop in export income and rising import costs could reduce foreign exchange inflows. This might weaken the naira and make Nigeria less attractive to global investors.
Protectionist trade policies in the U.S. may also lower foreign direct investment (FDI) in emerging markets like Nigeria. Uncertainty in global trade policies can make investors more cautious.
PwC Recommendations for Nigeria
To reduce the impact of the tariff and future trade risks, PwC recommends several steps:
Strengthen AGOA and Trade Alliances
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Advocate for extended AGOA benefits and better trade terms.
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Build new trade ties beyond the U.S.
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Promote exports within Africa using AfCFTA (African Continental Free Trade Area).
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Seek trade agreements with more countries to reduce reliance on a few partners.
Boost Non-Oil Exports
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Support agro-processing, light manufacturing, and mining.
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Offer export incentives and encourage local input production.
Improve Infrastructure and Investment Climate
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Raise funds for public projects using long-term infrastructure bonds.
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Guarantee private sector investments with strong legal protections.
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Use Public-Private Partnerships (PPPs) to build key projects like seaports.
PwC calls for the creation of a clear list of bankable infrastructure projects. Transparency in these projects will help attract reliable funding and private sector support.
The U.S. tariff and changing global trade trends present serious risks for Nigeria’s economy. While the policy is on hold, its possible enforcement remains a concern. Nigeria must act fast to protect its exports, support local industries, and attract investments. By reducing reliance on oil and diversifying trade partners, the country can better weather global shocks.
