By Stanley Onyeka, Lagos
Despite the Federal Government’s dismissal, the Manufacturers Association of Nigeria (MAN), yesterday, insisted that the imposition of a 14% tariff on imported products by the United States (U.S.) has significant impact on Nigeria’s trade and industrial landscape.
The Director-General (DG), MAN, Segun Ajayi-Kadir, in a statement, in Lagos, noted that the U.S. is one of Nigeria’s most significant trade partners, and accounts for approximately seven per cent of its non-oil exports.
Accordingly, Mr. Ajayi-Kadir, said the new tariff regime directly threatens this trade dynamic, particularly as Nigeria projects an ambitious N55 trillion budget and is experiencing a downward trend in global crude oil prices.
He argued that the hike comes at a time when the country is just recovering from the impact of the government’s policy mix that has had negative effects on the manufacturing sector.
He said: “Nigeria’s manufacturing sector, which contributed 8.64% to the country’s Gross Domestic Product (GDP) in 2024, is one of the most predisposed sectors of the economy when it comes to trade policy shifts.
“The imposition of a 14% tariff on Nigerian exports significantly undermines the competitiveness of locally manufactured goods in the U.S. market.
“Manufacturers who are exporters in agro-processing, chemicals and pharmaceuticals, basic metal, iron and steel, non-metallic mineral products and other light industrial manufacturing rely heavily on the U.S. for market access.
“With increased costs for American buyers due to the tariffs, demand for Nigerian products is expected to decline.”
Investment disincentive
The MAN DG said further that in addition to revenue losses, the new tariffs posed a significant disincentive to firms investing in value-added manufacturing.
According to him, over the past decade, manufacturers have made concerted and strategic efforts to support the country’s transition from exporting raw commodities to semi-processed and finished goods.
He continued: “However, higher market-entry costs because of higher tariff on Nigerian products will reduce the profitability of such investments, making it more attractive for firms to revert to exporting raw materials.
“This is counterproductive to Nigeria’s industrialisation agenda and compromises the long-term goal of achieving export diversification under platforms such as the African Continental Free Trade Agreement (AfCFTA).”
He added that the tariff also impacts employment in the manufacturing sector, noting that as export revenues fall, many companies may cut back on production or downsize their workforce to reduce costs.
Manufacturers who are exporters in agro-processing, chemicals and pharmaceuticasl, basic metal, iron and steel, non-metallic mineral products and other light industrial manufacturing rely heavily on the U.S. for market access. With increased costs for American buyers due to the tariffs, demand for Nigerian products is expected to decline.
Beyond manufacturing, Mr. Ajayi-Kadir, argued that the economy is not insulated from the effects of the U.S. tariff and its direct impact on Nigeria’s trade balance.
This, he said, is because the country is already grappling with a fragile external sector, any significant reduction in exports to the U.S. would erode the current trade surplus, potentially pushing the balance into deficit.
He equally expressed concern over potential pressure on Nigeria to reciprocate by reducing its own tariffs on U.S. goods.
He added that while the U.S. may frame this as a step toward “fair trade,” the reality is that lowering tariffs on U.S. imports could flood the Nigerian market with subsidised goods, thereby undermining local producers.
He said: “Nigeria has, in recent years, made commendable strides toward achieving self-sufficiency in several manufacturing segments and diversifying away from oil.
“However, succumbing to external pressures to liberalise trade prematurely would reverse these gains.
“Furthermore, the absence of institutional capacity to engage in sophisticated trade negotiations places Nigeria in a vulnerable position.
“While countries with advanced legal and economic institutions may be able to negotiate favourable terms, Nigeria is at a disadvantage due to capacity constraints.”
