Nigeria’s Manufacturing Sector Faces New challenges with U.S. Tariff Spike
The United States’ recent decision to impose a 14% tariff on Nigerian exports has triggered alarm bells across Nigeria’s economic and industrial sectors. According to the Manufacturers Association of Nigeria (MAN), this development could seriously derail the nation’s fragile industrial growth and complicate its economic recovery efforts.
In a press statement released in Lagos on Tuesday, Mr. Segun Ajayi-Kadir, the Director-General of MAN, described the U.S. move as a “direct threat” to Nigeria’s export potential, particularly at a time when the country is grappling with a weakened oil market and an ambitious N55 trillion national budget.
The United State Is One Of The Key Trading Partner for Nigeria
The United States currently accounts for about 7% of Nigeria’s non-oil exports, making it one of the most crucial trading destinations for local manufacturers. For years, Nigeria has worked to diversify its economy away from crude oil dependency by growing its manufacturing exports—especially in agro-processing, chemicals, pharmaceuticals, iron and steel, and other light industries. However, Ajayi-Kadir emphasized that this new tariff significantly erodes Nigeria’s competitiveness in the U.S. market.
“The competitiveness of locally produced items in the U.S. market is severely weakened by the introduction of a 14 percent tax on Nigerian exports,” he said. Manufacturers could suffer major setbacks.
The timing of the tariff could not be worse. Nigeria’s manufacturing sector, which contributed 8.64% to GDP in 2024, is still struggling with the lingering effects of volatile policies, exchange rate pressures, and energy costs. Ajayi-Kadir warned that the rising cost of Nigerian goods in the U.S. will likely reduce demand, forcing manufacturers to consider cutting back production, reducing investment, or even laying off staff. These consequences would directly impact the nation’s industrial productivity and employment rates. “Demand for Nigerian products is expected to decline as a result of the tariffs' increased costs for American buyers,” he stated.
A Blow to Industrialization and Export Diversification Goals.
Over the years, Nigeria has made significant progress in transitioning from raw material exports to semi-processed and finished goods. This is aligned with long-term strategies under initiatives like the African Continental Free Trade Agreement (AfCFTA). But the 14% tariff could undo those gains. The MAN DG explained that if export profitability declines, manufacturers may revert to exporting raw materials, undermining value addition and jeopardizing Nigeria’s long-term industrialization goals. “This undermines the long-term objective of attaining export diversification and is detrimental to Nigeria's industrialization agenda,” Ajayi-Kadir warned.
The effects of this tariff are not limited to the factory floor. Ajayi-Kadir pointed out that Nigeria’s trade balance—already under stress—could further deteriorate. A sharp drop in U.S.-bound exports could shift the current trade surplus to a deficit, weakening the country’s already fragile external sector. He also raised concerns about reciprocal trade pressure. Nigeria may face calls to lower its own tariffs on U.S. goods, which could open the door for heavily subsidized American products to flood the local market, further harming Nigerian producers.
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“We Must Not Cave to External Pressure” Ajayi-Kadir cautioned against Nigeria bowing too easily to foreign pressure in global trade negotiations. While countries like the U.S. possess sophisticated legal and economic frameworks, Nigeria often lacks the institutional capacity to negotiate on equal footing. “Nigeria is at a disadvantage due to capacity constraints, while countries with advanced legal and economic institutions may be able to negotiate favorable terms,” he said.
The Way Forward: Strategic Diplomacy and Domestic Strengthening As Nigeria navigates this complex scenario, experts are calling for targeted diplomatic engagement with the U.S. and a doubling down on domestic industrial reforms. Diversification remains a national priority, but its success depends on shielding local industries from external shocks and unfair trade practices.
A Critical Moment for Nigeria’s Trade Future
The new U.S. tariff has created a critical inflection point for Nigeria’s trade and industrial policy. As the nation aims for self-reliance and global competitiveness, ensuring a supportive and protective environment for manufacturers is more urgent than ever. Policymakers, trade experts, and business leaders must work together to mitigate the impact, sustain industrial gains, and safeguard the livelihoods of millions who depend on Nigeria’s manufacturing sector for employment and income.
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