By Yinka Kolawole

In this interview, the Director General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, reviews the global tariff war initiated by US President Donald Trump and the implications for the Nigerian manufacturing sector and the economy at large. Excerpts:

What does this US tariff hike mean for Nigerian manufacturers and exporters to the US?

Generally speaking, what Trump is doing is shaking the table in line with his strategic objective of making America come first in all things.

Tariffs all over the world are used to achieve several purposes. I think for him, it is to directly grow domestic manufacturing and restrict imports because, for a long time, according to him, people have been taking America for a ride. But for us in Nigeria, in terms of manufactured exports, we are only beginning to make inroads as also part of our own strategic objective of mitigating the impact of forex.

So, there is a stumbling block in one of the countries that we are expecting to make in-roads. Undoubtedly, the United States remains one of Nigeria’s most significant trade partners, accounting for approximately 7 percent of its non-oil exports. 

In 2024, bilateral trade between Nigeria and the US stood at N9.59 trillion, representing 6.9 percent of Nigeria’s total trade volume. Of this, Nigerian exports to the U.S. amounted to N5.52 trillion, while imports from the U.S. stood at N4.07 trillion. 

The new tariff regime directly threatens this trade dynamic, particularly in a year when Nigeria is projecting an ambitious N55 trillion budget and facing the downward trend in global crude oil prices, which have already fallen below the government’s benchmark of $75 per barrel. 

The tariff hike, therefore, comes at a vulnerable moment when the country is just recovering from the impact of the government policy mix that has had negative effects on the manufacturing sector. 

How should Nigeria prepare for eventualities like this?

The response that Nigeria is going to give must take into consideration that there is no way you can beat an efficient and conducive business environment for domestic industries.

It is important that in building resilience and readiness, we should ensure that the domestic environment is supportive; supportive regulations, assurance of policy and all of that.

We need to hold regulatory agencies in check to improve competitiveness, for any eventuality because there will always be surprises. For instance, at this moment, the Standards Organisation of Nigeria (SON) must be on high alert.

The Nigerian Ports Authority (NPA) that is dangling a 15 percent increase in port fees should just forget it now, and never think about it. The 4 percent free-on-board that Customs is talking about should just be. In fact, we should assume we never had it.

We should build a robust sector, a productive sector that will be able to respond to this eventuality.

Lessons for Nigeria and the role of African Continental Free Trade Area

Things have actually been working well for Nigeria in Africa. For instance, last year, we traded more within Africa than with any other nation on earth.

I think our trade was up to N8.7 trillion with Africa whereas it was N5.5 trillion with America even China was N3 trillion, so I think that we are already set on a trajectory of making AfCFTA work for our exports and our imports.

I believe that’s very important and in terms of lessons we should know that growing intra-African trade is probably the best way for us to survive as individual countries, and for Africa to project and make inroads in international trade.

How it affects  competitiveness of locally manufactured goods

Nigeria’s manufacturing sector, which contributed 8.64 percent to the country’s 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 U.S. market. MAN members who are exporters in agro-processing, chemicals and pharmaceutical, basic metal, iron & 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.

For instance, processed agricultural goods such as cocoa derivatives, sesame seeds, and ginger, which have gained modest penetration in U.S. markets, are likely to witness a drop in export volume. According to the National Bureau of Statistics, agricultural exports accounted for over N4.42 trillion in 2024, with the U.S. being one of the top destinations. The tariff could potentially wipe out N1 to N2 trillion of that figure annually.

Is employment in the manufacturing sector threatened?

The implications on employment in the manufacturing sector are dire. As export revenues fall, many companies may reduce their production scale or downsize their workforce to cut costs.

Contract manufacturers, small-scale industrialists, and firms operating in special economic zones targeting the U.S. market are likely to be worst hit. This could lead to job losses at a time when the national unemployment rate remains high, and youth underemployment continues to pose a socio-economic threat. 

Additionally, Nigerian firms that are part of regional or global supply chains – particularly in pharmaceuticals, chemicals, foods and beverages and motor vehicle assembly – stand to lose their competitive edge, as their products become less attractive to U.S. companies seeking sourcing partners.

Potential impact on  investors’ confidence

Moreover, the tariff hike will halt investors’ confidence in the economy. Nigeria has been striving to position itself as a manufacturing hub in West Africa, partly by attracting foreign direct investment from firms interested in tapping into both domestic and export markets. The new tariff regime makes Nigeria a less attractive proposition for such investors, particularly those who view access to the U.S. market as a key strategic advantage.

In 2023 alone, Nigeria’s manufacturing sector attracted over $1.6 billion in capital importations. That figure could decline significantly in 2025 if investor confidence is not restored through robust policy responses.

The new tariffs pose a significant disincentive to firms investing in value-added manufacturing. Over the past decade, manufacturers have 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 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.