Donald Trump's potential return to the presidency on January 20, 2025, is raising alarms for Nigeria's banking sector and foreign direct investment (FDI). Analysts warn that Trump's proposed tax reforms, including a reduction of the U.S. corporate tax rate from 21% to 15%, could mirror the effects seen after the 2017 Tax Cuts and Jobs Act, which led to a significant drop in FDI into Nigeria—from $4.65 billion in 2017 to just $2.23 billion in 2018 [5ecd78fb].
In a recent announcement, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, expressed concerns over Trump's plan to establish an external revenue service aimed at imposing taxes and tariffs on foreign countries. During his inauguration speech on June 20, 2025, Trump stated, "I will immediately begin the overhaul of our trade system to protect American workers and families" [6c005e1e]. Oyedele noted that this strategy could disrupt international trade and complicate the global tax system, emphasizing the need for Nigeria to revamp its tax framework to navigate these potential challenges [6c005e1e].
The anticipated tariffs on imports could further complicate matters for Nigerian exporters, particularly those in the oil and agriculture sectors, as increased costs may affect the banks that finance these industries [5ecd78fb]. Trump has threatened to impose 100% tariffs on BRICS nations and a potential 25% levy on goods from U.S. allies, which raises concerns about inflation if a universal tariff of 10-20% on imports is enacted [6c005e1e]. Finance expert Abayomi Fashina emphasizes the need for Nigerian banks to adopt agile strategies and robust risk management practices to navigate the challenges posed by Trump's policies [5ecd78fb].
Moreover, while the risks are substantial, there are also opportunities for Nigerian banks to diversify their portfolios and attract new investments amidst the shifting economic landscape [5ecd78fb]. As Trump’s administration could lead to a more protectionist trade environment, Nigerian banks must prepare for potential volatility in foreign investment flows and adapt to the changing dynamics of global trade [5ecd78fb].
The interconnectedness of the U.S. economy with Nigeria's financial landscape means that Trump's policies could have ripple effects, influencing not only local banks but also the broader economic stability of Nigeria [5ecd78fb]. As the situation evolves, stakeholders in Nigeria's financial sector are urged to remain vigilant and proactive in their strategies to mitigate risks and seize emerging opportunities [5ecd78fb].