Trump’s trade war: Why Nigeria should pay attention

What happens when the U.S. raises tariffs on China, Mexico, and Canada? While it may seem like a distant issue for Nigeria, the ripple effects of this trade war could profoundly affect the country’s economy.

From energy prices to shifting trade partnerships and the flow of foreign investment, Nigeria’s future could be shaped by this global economic shift—whether the country is ready for it or not.

Energy prices: A blessing or a curse?

One of Trump’s biggest moves is a 10 percent tariff on Canadian oil. Canada is a major supplier of crude to the U.S., and this tariff could force American refiners to look elsewhere for oil imports. Could Nigeria step in to fill the gap?

Possibly, as Africa’s largest oil producer, Nigeria exports more than half of its crude to Europe and the U.S. If Canadian oil becomes more expensive for U.S. buyers, demand for Nigerian crude may rise, pushing up global oil prices.

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This could boost Nigeria’s foreign exchange earnings—but it’s not all good news. Higher oil prices often lead to higher petrol costs in Nigeria, which could fuel inflation at home.
Given that Nigeria still relies on fuel imports, the government’s ability to stabilise local energy prices will be tested.

Basit Shuaib, an economist and financial advisor at a multinational firm whose name remains anonymous, notes, ‘While rising oil prices could be a windfall for Nigeria’s oil revenue, the government must be cautious.

Nigeria’s economy is highly vulnerable to fluctuations in oil prices, and if higher energy costs lead to inflation, the public may bear the brunt of the price hikes—compounding the struggles of the overburdened masses already grappling with economic reforms.’

A new trade landscape: Nigeria’s chance to step up?

Trump’s tariffs are making the U.S.-China trade more expensive. This could force China to diversify its suppliers—a potential opening for Nigeria’s non-oil exports.

China has been a key market for Nigerian agricultural products, solid minerals, and manufactured goods. If Chinese manufacturers face higher costs due to U.S. tariffs, they may start sourcing more raw materials and goods from alternative markets, including Nigeria.

 “However, Nigeria must be ready to seize this opportunity by improving its logistics, production quality, and trade agreements.”

However, Nigeria must be ready to seize this opportunity by improving its logistics, production quality, and trade agreements. Without this, other nations—like Vietnam or Indonesia—could take advantage of China’s demand instead.

A commodity market analyst suggests, “Nigeria stands at a critical juncture. If it enhances its infrastructure and refines its trade policies, it can capture a larger share of Chinese demand.

But without these reforms, we may see countries with more competitive advantages, such as Vietnam, filling the void.”

Read also: Kazakhstan eyes Nigerian talent, agriculture, oil in new trade push

Foreign Investment: A shift in global capital?

Trump’s hardline stance on tariffs, coupled with economic uncertainty, may discourage foreign investment in some sectors. Traditionally, China has been a top investor in Africa, including Nigeria, pouring billions into infrastructure and energy projects.

If China faces economic strain from the trade war, its outward investment could slow, affecting Chinese-funded projects in Nigeria—from railways to tech hubs.

However, the U.S.-China tensions could also push American and European companies to look beyond China for new investment opportunities.

If Nigeria plays its cards right—by strengthening business regulations, reducing corruption, and improving ease of doing business—it could attract fresh capital from firms looking for alternatives to China.

Inflation and supply chains: Higher costs for Nigerians?

With global trade under strain, supply chain disruptions could drive up prices of imported goods in Nigeria—especially technology, machinery, and consumer electronics that originate from China.

If China retaliates against U.S. tariffs by restricting exports of key components (like semiconductors and batteries), Nigerian importers could struggle with higher costs, potentially affecting local businesses and inflation.

The big picture: Will Nigeria seize or miss this moment?

Trump’s trade war isn’t just an American or Chinese problem—it’s a global shift that Nigeria must navigate carefully. Higher oil prices, shifting trade alliances, and changing investment flows present both risks and opportunities.

If Nigeria strategically positions itself, it could benefit from increased oil demand, attract investors looking for alternatives to China, and grow its non-oil exports. But if it remains passive, it may simply bear the brunt of inflation and economic volatility.

The question is: Will Nigeria act decisively or be caught in the crossfire?

Oluwatobi Ojabello, senior economic analyst at BusinessDay, holds a BSc and an MSc in Economics as well as a PhD (in view) in Economics (Covenant, Ota).
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