NIGERIA’S 2025 budget is in danger due to the United States’ President Donald Trump imposition of tariffs on several nations having trade surpluses with the U.S. Of particular interest is Mr Trump’s 104 percent tariff on Chinese goods, which has forced oil prices down by 4 percent, their lowest in at least four years.
Brent futures fell by 3.79 percent to $60.44 per barrel as U.S. West Texas Intermediate crude futures declined 4.13 percent to $57.12 – their lowest level since February 2021.
President Trump fulfilled his threat on Wednesday morning, imposing 104 percent tariff on China, adding 50 percent more to tariffs as Beijing refused to lift its retaliatory duties on U.S. goods by Tuesday given by Trump. China had imposed reciprocal 34 percent tariffs on all imports from the United States after President Trump escalated a global trade war earlier.
The stock market is not spared as futures tied to the S&P 500 fell by 1.6 percent on Wednesday morning, with Nasdaq dropping 1.5 percent and Dow Jones Industrial Average futures sinking 1.5 percent.
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Mr Trump’s reciprocal tariffs have stunned the Wall Street as global stocks tumble due to sliding investor confidence and uncertainties pervading the markets.
“This practice of the US is not in line with international trade rules, seriously undermines China’s legitimate rights and interests, and is a typical unilateral bullying practice,” China’s State Council Tariff Commission said in a statement announcing its retaliatory tariffs on April 4, as reported by CNN.
China vowed to “fight to the end” an editorial in Chinese official state newspaper Xinhua accused Trump of “naked extortion.” The editorial said, “Utterly absurd is the underlying logic of the United States: ‘I can hit you at my will, and you must not respond. Instead, you must surrender unconditionally. This is not diplomacy. It is blunt coercion dressed up as policy.”
Impact on Nigeria
Mr Trump had imposed 14 percent tariffs on Nigerian goods. The 14 percent tariff is partly a retaliatory move against Nigeria’s import ban on 25 different product categories coming from the United States.
The Office of United States Trade Representative (USTR) said the ban, particularly in agriculture, pharmaceuticals, beverages, and consumer goods, was negatively impacting US trade balance with Nigeria.
Writing on Tuesday on its X handle, the US Office condemned Nigeria’s restrictions on beef, pork, poultry, fruit juices, medicaments, and spirits, stating, “These policies create significant trade barriers that lead to lost revenue for US businesses looking to expand in the Nigerian market.”
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With markets reeling from Trump’s tariffs, analysts say Nigeria’s 2025 budget may suffer. Nigeria earns most of its foreign exchange from oil exports, and falling oil prices are bad news for Africa’s most populous economy.
The 2025 budget was built on an benchmark of $75 per barrel for crude oil and a production target of 2.06 million barrels per day (bpd).
An oil market expert, Mr John Salami, predicts that oil will slide to $50-$60 per barrel, which will “seriously hurt” Nigeria’s budget.
“The truth is that we are a mono economy. A drop in oil price will hamper Nigeria’s 2025 budget and several projects lined up for the year. The ride won’t be easy for Nigeria. Also, the United States has also shown that it has been nursing anomosity against Nigeria’s ban on its products. So, the situation is not palatable,” he said.
How does that affect naira?
Mr Trump, the 47th President of the United States, plans to hit at the heart of Nigeria’s revenue – though he is basically interested in pro-American policies and strengthening the dollar.
“With lower oil prices, Nigeria’s foreign exchange earnings will fall, leading to more acute dollar shortages. This will weaken the naira and, perhaps, force the Central Bank of Nigeria (CBN) to dip its hand in the foreign reserves to support it,” said a Lagos-based development economist, Dr Onwe Ndinabo.
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“This will also expose to everybody that the 2025 budget is just too optimistic. The budget will most certainly fall short of implementation.”
He said Mr Trump’s usual stronger dollar policy would always weaken the naira and make imported good more expensive for Nigerian consumers.
