Nigeria’s economic reliance on crude oil exports experienced a significant setback in the first quarter of 2025, as revealed by US Census Bureau data. Total US imports from Nigeria plummeted by over 20%, dropping from $1.401 billion in Q1 2024 to $1.118 billion in Q1 2025. This decline was primarily attributed to fluctuations in crude oil shipments, which constitute the bulk of Nigeria’s exports to the US. While March 2025 witnessed a slight recovery in both the volume and value of crude oil exports compared to February, this improvement was insufficient to offset the sharp declines experienced in January and February, ultimately resulting in a substantial year-on-year contraction. This vulnerability to the volatile global oil market underscores the urgent need for Nigeria to diversify its export portfolio.
While Nigeria’s exports to the US dwindled, imports from the US followed an opposing trajectory. US exports to Nigeria surged during the same period, climbing from $1.205 billion in Q1 2024 to $1.418 billion in Q1 2025. A prominent component of these exports was motor vehicles and parts, with passenger cars dominating the category. This divergent trade flow resulted in a significant trade surplus for the US, exceeding $300 million, a stark reversal from the $195 million surplus Nigeria enjoyed in Q1 2024. This widening trade deficit, coupled with the dwindling oil export revenue, paints a concerning picture of Nigeria’s economic outlook and further highlights the necessity of reducing its dependence on crude oil.
The decline in Nigeria’s crude oil exports to the US reflects not only market fluctuations but also broader shifts in global energy dynamics. The US, driven by increasing domestic energy production and evolving geopolitical strategies, has been reducing its reliance on foreign oil, including imports from Nigeria. This trend underscores the growing pressure on Nigeria to adapt to the evolving energy landscape and actively pursue diversification of its export base. The country needs to identify and develop alternative export commodities and markets to mitigate the risks associated with its over-reliance on a single, volatile commodity.
Adding to Nigeria’s economic woes was the reintroduction of a 14% reciprocal tariff on Nigerian exports by the Trump administration in April 2025. This protectionist measure, justified by the US as a response to Nigeria’s import restrictions on various American goods, posed a significant threat to Nigeria’s already fragile export earnings, particularly impacting its nascent non-oil export sector. With over 90% of Nigeria’s exports to the US comprising crude oil and related products, the remaining fraction, including agricultural commodities, fertilizers, and manufactured goods, faced substantial setbacks due to the imposed tariffs. This move further hampered Nigeria’s efforts to diversify its exports and reduce its dependence on oil.
The combined effect of declining oil revenue and the newly imposed tariffs forced the Central Bank of Nigeria to intervene in the foreign exchange market, injecting nearly $200 million to stabilize the naira, which came under immense pressure. This intervention reflects the precarious state of Nigeria’s economy, grappling with both internal and external challenges. The tariff shock threatened to exacerbate the already widening trade deficit and worsen dollar liquidity, creating a ripple effect across various sectors of the Nigerian economy.
However, following intense diplomatic and economic pressure, the Trump administration temporarily suspended the tariffs for a 90-day period, providing a reprieve for Nigeria. This temporary suspension offered a crucial window of opportunity for Nigeria to engage in dialogue and renegotiation with the US, aiming to resolve the trade dispute and secure a more favorable trade arrangement. This period represented a critical juncture for Nigeria to address the underlying trade concerns raised by the US and to work towards a mutually beneficial solution that would promote long-term economic stability and growth. This temporary respite also provided Nigeria with valuable time to further strategize on diversifying its export basket and strengthening its non-oil sectors to mitigate future vulnerabilities.
