With a commanding lead, Donald Trump won the U.S. presidential election, surpassing the 270 electoral votes required to win the office. During his victory address, Trump referred to his movement as historic and predicted a “golden age” for America. Following the announcement of Trump’s victory, the world’s stock, bond, and Cryptocurrency markets all responded. While some assets, like gold and Chinese equities, fell, others, like the U.S. dollar and Bitcoin, rose. Trump’s economic ideas, which include increasing domestic oil production and advocating for corporate Tax cuts, are anticipated to have an effect on Inflation and oil prices globally, which might be detrimental to nations that rely heavily on oil, such as Nigeria.
Market Volatility could result from Trump’s return to power because of his unpredictable policies, particularly with regard to Tariffs and Trade relations with China and Europe. There are worries that his policies could lead to inflation and force the Federal Government to keep interest rates higher for longer. This would have a negative impact on U.S. trading partners’ currencies and assets like gold. In both the domestic and international arenas, Donald Trump’s policies have historically deviated greatly from those of his predecessors, which may have profound effects on the world economy, particularly Nigeria.
Trade tensions increased under Trump’s previous term.
His “America First” goal, which frequently results in isolationist actions, deregulation, tax cuts, and protectionist trade policies have all been features of his strategy. On the other hand, the Joe Biden administration adopted a more diplomatic and multilateral strategy, re-engaging with international organisations, addressing climate change, and promoting social and economic fairness through large government expenditures and progressive taxation. Trade tensions increased under Trump’s previous term (2017–2021) as a result of his tariffs on China and European nations, especially in the manufacturing, technological, and agricultural sectors.
Global supply chains were disrupted by the tariffs and the revision of trade agreements like NAFTA (which was replaced by the USMCA), which benefited American industries. Nigeria may be indirectly impacted if these policies are reinstated. Nigeria is a nation that depends mostly on oil exports, making it susceptible to changes in world oil prices. Trump’s policies, which encourage American oil production and restrict imports, may have an impact. Trump’s policies may increase tensions in the larger geopolitical arena, particularly in areas where Nigeria has vital interests.
Other Nigerian industries may be potentially affected.
Possible changes in international peacekeeping operations are indicated by his administration’s less interventionist approach to international crises and his resistance to multilateral military alliances like NATO. As Africa’s largest Economy and a major contributor to peacekeeping efforts around the continent, Nigeria may find it difficult to navigate a less stable international order. Nigerian industries other than cryptocurrencies and oil may potentially be affected. Nigeria may experience Inflationary Pressures and increased debt servicing expenses if Trump’s protectionist policies maintain high global interest rates and boost the US dollar.
Nigeria’s debt management office reports that in the first half of 2023, the nation’s total public debt increased to $103 billion, with servicing External Debt becoming a significant burden. Nigeria’s fiscal budget would be put under additional strain if debt repayments become more costly due to a stronger US dollar. Furthermore, the reinstatement of Trump’s tariffs on international commerce may have an effect on industries like Manufacturing and agriculture, which are essential to Nigeria’s diversification efforts. The worldwide manufacturing slowdown may decrease demand for Nigerian raw materials, cutting the nation’s Export earnings, if the U.S.-China trade conflict re-emerges.
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Furthermore, Trump’s immigration policies may have an impact on the remittances sent home by Nigerians employed outside, especially in the United States. The World Bank estimates that Nigeria received $19 billion in remittances in 2022, which was a significant contributor to the stabilisation of the Naira and a major source of income for many people. Although some markets, such as Bitcoin and U.S. stocks, may see short-term benefits from Trump’s return to the White House, Nigeria’s economy may have more mixed long-term repercussions. In order to reduce the risks associated with an uncertain global economic environment, Nigerian policymakers would need to keep a careful eye on U.S. trade and fiscal policies, plan for future economic shocks, and modify local laws.