Nigerian Manufacturers Raise Alarm Over U.S. Tariff Hike, Warns of Deep Economic Fallout

The Manufacturers Association of Nigeria (MAN) has sounded the alarm over the recent imposition of a 14 per cent tariff on Nigerian exports to the United States, calling the move a significant blow to Nigeria’s already fragile industrial and economic landscape. 

The tariff, a byproduct of former U.S. President Donald Trump’s expansive global trade agenda, has triggered widespread concern among Nigeria’s manufacturing and export stakeholders.

In a statement obtained by news.ng on Tuesday, Segun Ajayi-Kadir, Director General of MAN, said the tariff represents not just a trade barrier but a direct threat to the country’s economic stability, job creation efforts, and industrial diversification agenda.

“The announcement of a 14 per cent tariff on Nigerian products entering the United States, as part of President Donald Trump’s ongoing global tariff policy, has triggered widespread concern across Nigeria’s trade and industrial landscape,” Ajayi-Kadir said. “The consequences for developing nations like Nigeria are profound and far-reaching.”

According to MAN, the U.S. remains one of Nigeria’s largest trade partners, accounting for approximately 7 per cent of the nation’s non-oil exports. In 2024, the total bilateral trade volume stood at N9.59 trillion, with Nigerian exports to the U.S. totalling N5.52 trillion. Ajayi-Kadir stressed that the new tariff regime jeopardises this crucial trade link, especially in a year when Nigeria is operating under a projected N55 trillion budget and contending with tumbling global crude oil prices—now below the government’s $75 benchmark 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,” he warned.

The manufacturing sector, which contributed 8.64 per cent to Nigeria’s GDP in 2024, is particularly vulnerable to changes in global trade policy. MAN notes that members engaged in agro-processing, pharmaceuticals, basic metals, non-metallic minerals, and other light industrial sectors are likely to suffer significant setbacks due to the increased cost of accessing the U.S. market.

“The imposition of a 14 per cent tariff on Nigerian exports significantly undermines the competitiveness of locally manufactured goods in the U.S. market,” said Ajayi-Kadir. “Demand for Nigerian products is expected to decline, especially processed agricultural goods such as cocoa derivatives, sesame seeds, and ginger.”

The implications extend far beyond lost revenue. MAN estimates that the tariff could potentially erase N1 to N2 trillion annually from Nigeria’s agricultural export earnings—exports which reached over N4.42 trillion in 2024, with the U.S. as a key destination.

Additionally, the association is worried about long-term disincentives to value-added manufacturing. Over the past decade, Nigerian manufacturers have shifted focus from raw commodity exports to finished goods. Ajayi-Kadir warned that higher entry costs may force firms to revert to exporting raw materials—undermining Nigeria’s industrialisation goals and threatening the success of trade frameworks like the African Continental Free Trade Agreement (AfCFTA).

“This is counterproductive to Nigeria’s industrialisation agenda and compromises the long-term goal of achieving export diversification,” he said.

On the employment front, the ripple effects are equally troubling. Many manufacturers may be forced to scale down operations or lay off workers, particularly those in special economic zones reliant on U.S. markets.

“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,” Ajayi-Kadir lamented.

The Director General further noted that Nigerian companies embedded in global supply chains—especially in sectors like pharmaceuticals, chemicals, food, beverages, and vehicle assembly—will lose competitive ground as their products become more expensive and less attractive to U.S. buyers.

The broader Nigerian economy is also in the firing line. MAN warned that a reduction in exports to the U.S. could push Nigeria’s trade balance into deficit, eroding foreign reserves and putting pressure on the naira. This could prompt more aggressive interventions by the Central Bank of Nigeria in the forex market, with unintended consequences.

“If export earnings from non-oil sectors such as manufacturing also decline due to the new U.S. tariffs, the government will face a greater shortfall in revenue,” Ajayi-Kadir said. “This could lead to cuts in capital expenditures, delays in infrastructure projects, and an increase in borrowing—all of which could undermine economic growth and stability.”

He also raised concerns about inflation and monetary tightening. With reduced forex earnings, Nigeria could face rising inflation, compelling the Central Bank to hike interest rates. “However, higher interest rates will increase the cost of borrowing for businesses, including manufacturers, and could stifle domestic investment,” he said.

Foreign direct investment is also at stake. Nigeria attracted over $1.6 billion in capital importation to the manufacturing sector in 2023, but MAN fears that the new tariff regime could dampen investor confidence.

“The new tariff regime makes Nigeria a less attractive proposition for investors, particularly those who view access to the U.S. market as a key strategic advantage,” Ajayi-Kadir stated.

MAN’s broader concern is that the U.S. move signals an asymmetrical trade policy that disadvantages emerging economies. There’s also the risk that Nigeria might be pressured into lowering its own tariffs on U.S. goods, opening the floodgates to subsidised imports that could swamp local industries.

“This is especially troubling given the weak state of Nigeria’s infrastructure, logistics, and energy supply—all of which already place local manufacturers at a disadvantage,” he said.

The Association is also wary of a policy reversal. After years of progress in building a resilient manufacturing base, Nigeria may be forced to liberalise trade prematurely, undoing hard-earned gains.

“Instead of supporting domestic production, such actions would signal to investors and industrialists that Nigeria lacks a coherent long-term trade and industrial policy,” Ajayi-Kadir emphasised.

Lastly, MAN criticised Nigeria’s limited institutional capacity to engage in complex trade negotiations, warning that this weakness puts the country at a strategic disadvantage.

“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 noted. “This could lead to suboptimal agreements that serve foreign interests more than domestic development objectives.”

The Manufacturers Association of Nigeria is calling for immediate government intervention to mitigate the impact of the U.S. tariff hike and protect the country’s manufacturing future. Among its recommendations are urgent diplomatic engagement, policy support for exporters, and strategic trade negotiations aligned with national development priorities.

As the economic clouds darken, Nigeria faces a crucial test of leadership, strategy, and resilience in navigating an increasingly turbulent global trade environment.