1 week ago
22
By Uche Usim
United States President, Donald Trump, returned to power on January 20, 2025, with a set of reforms and initiatives wrapped around his “America first” agenda.
At the heart of his protectionist posturing is a sweeping tariff regime that could reshape global commerce, trigger retaliatory actions from key trade partners and send shockwaves through global supply chains.
His comments and executive orders show he is ready to lock horns with China, the European Union and Canada, to achieve his America first agenda, which prioritises domestic manufacturing over global free trade.
Economic experts said Trump’s peppery tariffs are a wake-up call for third-world nations because retaliatory actions could disrupt international trade, escalate geopolitical tensions and worsen inflationary pressures across the world.
Trump had vowed to impose a steep 25 per cent tariff on imports from both Canada and Mexico last week, citing concerns over border security.
However, in a dramatic turn of events, he reached a last-minute agreement with Mexico, temporarily suspending the tariffs for 30 days in exchange for a commitment to deploy additional Mexican troops along the border.
More so, a similar accord was brokered with Canada, marking a swift and unexpected resolution to what had threatened to escalate into a major trade standoff.
Analysts noted that the issue is still delicate as tensions over tariff matters are yet to abate.
For third-world countries like Nigeria, which rely heavily on imports from the U.S. and China, the impending tariff war presents significant economic risks.
From potential trade restrictions to fluctuating commodity prices and capital outflows, analysts insist that the global South must prepare for a turbulent economic landscape.
As a panacea, they explained that by adopting smart policy adjustments, diversifying trade partners and leveraging regional cooperation, Nigeria and other developing nations can mitigate the impact and position themselves for long-term resilience.
In an interview with Daily Sun, the Director General, Center for the Promotion of Private Enterprises (CPPE), Dr Muda Yusuf, said that third-world countries like Nigeria, rather than being passive observers in the tariff war, should seize the opportunity to build self-reliant economies, ensuring long-term stability and resilience in an increasingly protectionist world.
He added that introspection remains non-negotiable especially now that President Trump is weaning many countries off US donations routed through agencies like the US Agency for International Development (USAID).
Currently, the fate of USAID hangs in the balance as Trump races to close it after he described the outfit established in 1961, as a total waste of money and run by ‘lunatics’.
Yusuf said: “The brewing tariff war between the United States, the European Union and China carries both positive and negative implications.
“As these economic giants grapple with trade restrictions, they will be forced to seek alternative trading partners to offset potential losses. This presents an opportunity for Nigeria and Africa, as some businesses may relocate operations or establish stronger trade ties within the continent, leading to a potential realignment of global trade and investment flows.
“However, there are significant risks. A prolonged trade war could disrupt supply chains, creating inflationary pressures worldwide. For African nations that rely on imports from these major economies, the cost of goods could rise sharply, effectively importing inflation.
“Unlike trade conflicts involving smaller economies, this dispute involves three of the world’s largest economic powerhouses, making its impact particularly serious.
“On the geopolitical front, President Donald Trump remains a key figure with considerable influence. His potential role in brokering peace in Ukraine and the Middle East could have far-reaching economic effects. A resolution in these regions would stabilise global commodity markets, allowing Russia to increase oil and Ukraine grain exports. This could drive down energy prices, reducing inflationary pressures and making essential goods more affordable worldwide. However, such a development could also pose a challenge for economies like Nigeria, which have based their foreign exchange (FX) revenue projections on oil prices around $75 per barrel. A significant drop in oil prices could destabilise fiscal planning and revenue expectations”, he explained.
The CPPE boss added that beyond trade and energy, immigration policies will play a crucial role in shaping economic outcomes. “Stricter immigration controls in the U.S could affect remittances, a vital source of foreign exchange for many African countries, especially Nigeria. Reduced remittance inflows would impact household incomes and overall economic stability, further exacerbating financial challenges.
“Additionally, donor funds, particularly in critical sectors such as health, human rights, democracy, and humanitarian interventions, could face disruptions. Many African governments rely on international aid to bridge funding gaps in healthcare and social welfare programmes. Should donor funding shrink due to shifting global priorities, African nations will need to step up with increased government spending to prevent service delivery breakdowns, especially in the health sector” he added.
Also commenting on the issue, Dr Paul Alaje, Chief Economist and Partner at SPM Professionals retaliatory actions on tariff hike are taken, they will certainly lead to inflation.
“It’ll have implications on prices of goods obviously. Unfortunately, inflation is already high in Nigeria. Despite all the interventions of government, inflation has not responded
Now, the NBS is trying to adjust the basket of commodities. We need to know that devaluing our currency is worse.
“Good thing is that the CBN is intervening in the market with 25k per registered BDC weekly and this is helping the official and other markets stabilise. The CBN can’t but intervene.
“We cannot use monetary tools to combat tariff-driven inflation. We need to start thinking differently.
We must plan. We can start a programme to aggressively boost in-country production and that is speaking to the supply side strategy.
There is low intra-African trade and we can develop that.
“We can take action by supporting producers and it may cost the government more funds but it’s better in the long run. I’m talking about local farmers, manufacturers, food processors and all that.
“This is not just the task of the federal government alone. States and local governments should also step in. The time to start is now. We only have about six months. In 12 months from now, it might be too late” he told Daily Sun.
In light of these evolving dynamics, experts said that African governments must be proactive in preparing for potential economic shocks.
This includes diversifying trade partnerships, strengthening domestic production capabilities to reduce import dependence, and ensuring fiscal resilience to withstand fluctuations in oil prices and donor funding.
Other insulators are; building foreign exchange reserves to cushion against capital flight; negotiating bilateral trade deals with alternative partners to bypass US-China tensions.
Experts have also advised third-world countries to engage with global trade organisations like the World Trade Organization (WTO) and United Nations Conference on Trade and Development (UNCTAD) to negotiate fair trade terms and seek exemptions from harsh tariff measures.
According to them, by taking these strategic actions, Africa can turn these global disruptions into opportunities for long-term economic stability and growth.
English (US) ·