The governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has expressed worry about the possible consequences of the new tariff measures imposed by the United States, cautioning that they may increase global Inflation and has a ripple effect on the already precarious state of the Nigerian economy. Speaking after the 299th Monetary Policy Committee (MPC) meeting, Cardoso emphasized the risk of growing Trade barriers, geopolitical tensions, and continuous supply chain interruptions. The decision by the U.S. administration to slap substantial Tariffs on imports from China, Mexico, and Canada, has already sent a shockwave across the global markets.
These newly imposed tariffs include a 25% levy on all Mexican and Canadian goods, a 10% tariff on Canadian oil and gas, and a 10% increase on Chinese imports. Although the U.S. administration has defended these actions as a means of combating drug trafficking and illegal immigration, the economic effects are anticipated to be extensive. In response, China imposed a retaliatory tariff of 10% on crude oil, farm equipment, and some other vehicles, as well as 15% duties on American coal and liquefied natural gas. Meanwhile, the US government has currently agreed to put a hold on the levy for Canada and Mexico for 30 days.
Potential impacts on rising domestic inflation.
Despite initial optimism with global growth projections estimated at 3.3% for 2025 and 2026, as per International Monetary Fund (IMF) data, Cardoso cautioned that the conflicts in Eastern Europe and the Middle East continue to threaten Economic Stability by affecting energy supply and trade. The added pressure from trade wars and protectionist policies could further weaken global economic recovery, especially for developing markets like Nigeria. The new U.S. tariffs are expected to contribute to rising inflation globally as businesses and consumers bear the cost of higher import prices.
For Nigeria, the consequences of the U.S. new tariffs and escalating global trade tensions could be severe. High inflation, which was 24.48% in January 2025 according to the National Bureau of Statistics’ (NBS) rebased Consumer Price Index (CPI), is already a huge challenge for Nigeria’s economy. Food inflation, a major concern for Nigerian households, was recorded at 26.08%, signaling persistent price pressures. One of the most immediate effects of the tariff measures is the potential increase in global energy prices. As an oil-producing country, Nigeria could benefit from higher crude oil prices in the short term.
Dependence on imports heightens Nigeria’s vulnerability.
However, if global demand declines as a result of weaker Economic Growth in key economies, oil prices could become unstable and impact Government Revenue and foreign exchange earnings. Moreover, Nigeria heavily depends on imports of machinery, raw materials, and produced goods. Import prices may rise as a result of higher tariffs on important trading partners like China, which would worsen Inflationary Pressures and lower purchasing power. An additional import cost change could put further strain on individuals and businesses in Nigeria, whose Economy is already struggling with currency depreciation and foreign exchange shortages.
Despite its status as Africa’s largest economy, the country is extremely exposed to external economic influences, especially when it comes to trade, inflation, and foreign exchange stability. The U.S. administration’s decision to impose new tariffs on imports from China, Mexico, and Canada adds another layer of risk, potentially exacerbating Nigeria’s economic fragility. The country’s dependency on imports extends to industrial equipment, food, and medications. Any cost increases brought on by a rise in international shipping expenses, supply constraints, or currency Devaluation would affect both consumers and businesses.
Related Article: CBN shifts to an inflation-targeting framework
Additional inflationary pressures could worsen already strained household earnings and impede domestic economic growth. The U.S. tariff measures could further weaken the global economy, with a high spillover on developing countries like Nigeria. Although foreign shocks are inevitable, Nigeria’s ability to fortify its economic roots will determine how much of an impact they have. The country will need to explore strategic policy solutions to reduce external shock effects and protect economic stability as the global trade environment grows more unpredictable.