As President Ahmed Bola Tinubu's government sets ambitious goals to grow Nigeria's economy to $1 trillion, the potential return of Donald Trump to the presidency raises concerns about the implications of his isolationist policies [0244f48c]. 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 foreign direct investment (FDI) into Nigeria—from $4.65 billion in 2017 to just $2.23 billion in 2018 [5ecd78fb].
During his inauguration speech on June 20, 2025, Trump stated, "I will immediately begin the overhaul of our trade system to protect American workers and families" [6c005e1e]. This strategy could disrupt international trade and complicate the global tax system, as highlighted by Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms. He emphasized the need for Nigeria to revamp its tax framework to navigate these potential challenges [6c005e1e].
The anticipated tariffs on imports could complicate matters for Nigerian exporters, particularly in the oil and agriculture sectors, as increased costs may affect the banks that finance these industries [5ecd78fb]. Trump's threats to impose 100% tariffs on BRICS nations and a potential 25% levy on goods from U.S. allies raise concerns about inflation if a universal tariff of 10-20% on imports is enacted [6c005e1e]. Finance expert Abayomi Fashina stresses the importance of Nigerian banks adopting agile strategies and robust risk management practices to navigate these challenges [5ecd78fb].
In a recent analysis, Oluwole Crowther reported that Trump's strategic tariffs on imports from Canada, Mexico, and China could further test the naira's recovery, which recently appreciated to N1,474.78/$ at the official FX market [03670a77]. However, concerns arise that these tariffs could undermine the naira's gains, especially as higher U.S. interest rates may strengthen the dollar, affecting Nigeria's capital inflows [03670a77].
Moreover, JPMorgan has warned that emerging economies like Nigeria may face significant capital outflows due to Trump’s 'America First' policies, with $19 billion in net capital outflows recorded from developing economies in the last quarter of 2024 and an additional $10 billion expected in Q1 2025 [dc17cda1]. A 'sudden stop' in capital flows could hinder economic growth and stability, particularly as Nigeria attracted only $3.9 billion in capital inflows in the first nine months of 2024, down from $23.7 billion in 2019 [027a899b].
Trump's plans to increase shale oil production could further lower global oil prices, which would negatively impact Nigeria's revenue and budget stability [03670a77]. Aisha Mohammed has warned that reduced oil revenue could trigger a chain reaction affecting jobs reliant on the oil sector, further complicating Nigeria's economic landscape [03670a77].
In this context, Nigeria's reliance on oil revenue poses a significant challenge. However, there is potential for Nigeria to leverage its diaspora for economic growth. Diaspora Nigerians reportedly spent over N60 billion during the festive season, and strategies such as labor agreements, support for diaspora entrepreneurs, tax rebates for remittances, and knowledge transfer opportunities could be explored [0244f48c].
Trump's economic policies are also seen as detrimental to developing countries more broadly. Many of these nations owe debts primarily in dollars, making it difficult for them to earn the currency needed to service these debts. Trump's tariffs hinder their ability to sell products in the U.S., while his policies inflate the dollar's value, complicating debt servicing [f6c62c5c]. The resulting economic strain could lead to increased poverty and migration from these countries, posing risks not only to their stability but also to the U.S. economy [f6c62c5c].
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. 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].