Declining Nigerian Oil Exports to the US and a Shifting Trade Balance
Nigeria’s crude oil exports to the United States witnessed a significant decline in the first half of 2025, amounting to $1.88 billion, a 17.5% decrease compared to the same period in 2024. This downturn reflects a weakening demand in the American energy market, further underscored by a marginal drop in imported crude oil volumes. While crude oil remains the dominant export, its share of total shipments decreased, indicating a gradual erosion of the US appetite for Nigerian oil. This decline contributed to a shift in the bilateral trade balance, resulting in a US trade surplus of $576 million with Nigeria, a stark reversal from the deficit recorded in the previous year. Despite the decrease in crude oil exports, overall trade between the two nations experienced modest growth, reaching $6.1 billion, driven primarily by a surge in US exports to Nigeria.
Impact of US Tariff Hikes and Nigeria’s Response
The decline in Nigerian exports coincides with escalating tariff pressures imposed by the Trump administration. A new tariff directive, effective August 7, 2025, raised tariffs on Nigerian goods to 15%, further complicating trade dynamics. This action is part of a broader US strategy to recalibrate trade relationships with countries perceived as providing inadequate access or protection for American businesses. Nigeria, however, has chosen a strategic response focused on diversifying its markets and bolstering domestic investment, rather than reacting impulsively to the tariff hikes. The government emphasizes strengthening its integration with the African Continental Free Trade Area and promoting non-oil exports, which have shown promising growth. Nigeria’s proactive approach seeks to mitigate the impact of US tariffs by expanding trade relationships with partners like Brazil, China, Japan, and the UAE, while also awaiting the outcome of discussions regarding the African Growth and Opportunity Act (AGOA).
The Broader Context of US-Africa Trade
The evolving US-Nigeria trade relationship unfolds within a larger context of shifting US-Africa trade dynamics. Despite a surge in US exports to Africa, a larger increase in imports from the continent resulted in a trade deficit for the US. This deficit, though slightly higher than the previous year, highlights the continued demand for African commodities despite protectionist tendencies in US trade policy. The month of June 2025 exemplified this volatility, as the US trade balance with Africa swung from a surplus to a deficit, driven by rising imports and falling exports. The US government, under Executive Order 14257, has implemented a revised trade framework for African and other non-Western partners, introducing a minimum tariff of 10% for countries lacking reciprocal trade agreements with the US. This policy shift, coupled with a 30% cap on new tariffs and sector-specific levies, impacts countries like Nigeria and South Africa that previously enjoyed preferential access under agreements like AGOA.
Divergent Trade Outcomes Among African Nations
The impact of the new US trade framework varies significantly across African economies. Egypt, benefiting from a lower tariff bracket, experienced a substantial increase in exports to the US and a widening trade surplus in its favor. Conversely, South Africa faced a deepening trade deficit with the US, driven by a surge in imports and limited export growth, exacerbated by high tariffs and levies on key exports like automobiles. Algeria also saw its trade deficit with the US narrow, while a collective of other African economies experienced a marginal reversal of their trade surplus. Some countries, including Lesotho, Madagascar, and Mauritius, received tariff relief under the revised framework, offering a degree of protection to vulnerable sectors.
Expert Perspectives on Nigeria’s Trade Strategy
Experts offer varying perspectives on the implications of the shifting US-Nigeria trade dynamics. Dr. Aliyu Ilias, a development economist, views the situation as an opportunity for Nigeria to strengthen its economy by exploring new trade partnerships and reducing its reliance on the US market. He emphasizes leveraging Nigeria’s position within BRICS and other international alliances to enhance self-reliance and diversify trade relationships. Dr. Muda Yusuf, an economist, downplays the threat of US tariffs, arguing that trade with the US represents a small share of Nigeria’s overall commerce. He points to the narrow structure of Nigeria’s exports to the US, dominated by crude oil, and highlights the relatively moderate tariff exposure compared to other countries.
Visa Restrictions: A Greater Impediment to Trade
Dr. Yusuf identifies US visa restrictions as a more significant obstacle to Nigeria’s trade and investment relationship with the US. He argues that these restrictions hinder the ability of Nigerian businesses to interact effectively with American counterparts and impede the growth of trade in services. The visa limitations also affect the large Nigerian diaspora in the US, which plays a crucial role in economic activities. Dr. Yusuf concludes that while tariffs receive considerable attention, addressing the barriers to mobility posed by visa restrictions is paramount for unlocking the full potential of Nigeria-US trade and investment ties. He warns that without improvements in visa policy, Nigeria’s ability to capitalize on opportunities in the US market will remain constrained, regardless of tariff adjustments.