Financial experts have warned that the 14% trade tariff recently imposed by the United States on Nigerian exports threatens the sustainability of the African Growth and Opportunity Act (AGOA).
In an interview with a correspondent in Ibadan on Monday, the experts expressed concern that the tariff could impact the duty-free provisions that have benefited Nigerian exporters under AGOA.
Dr. Olumuyiwa Alaba, a trade governance expert, predicted severe economic repercussions for Nigeria, which is still reeling from the aftermath of the COVID-19 pandemic and global economic disruptions.
He highlighted the global repercussions of universal tariffs, noting that U.S. stocks experienced their most significant losses since the pandemic, erasing over $6 trillion in market value. Other potential consequences include global inflationary pressures, disruptions to supply chains, and diplomatic tensions.
Alaba further explained that Nigeria’s exports to the U.S. in 2023, valued at $5.7 billion, could face significant setbacks. He emphasized that around $3.8 billion of this total benefited from AGOA’s duty-free provisions, particularly in oil and gas exports. However, the new tariff could strain non-oil sectors, including textiles, agriculture, and agro-processing.
The expert called for proactive steps to mitigate the impacts, including seeking alternative markets to protect jobs in key sectors. He also warned that Nigeria might retaliate with its own tariffs, potentially exacerbating inflation and reducing disposable income in the country.
Financial consultant Mr. Tunji Adepeju, on the other hand, expressed skepticism about the renewal of AGOA, noting that the act, first initiated under President Bill Clinton, has been renewed periodically, but its future remains uncertain under the current U.S. administration.
Adepeju acknowledged the efforts of the Tinubu-led government in diversifying Nigeria’s economy, particularly in boosting non-oil sector exports. He emphasized the importance of value-added exports, such as converting cocoa beans into finished chocolate products, to enhance Nigeria’s competitive advantage.
In a statement released on Sunday, Nigeria’s Minister of Industry, Trade, and Investment, Dr. Jumoke Oduwole, noted that non-oil products previously benefiting from AGOA are now at risk. She added that the newly imposed 10% tariff on key product categories could undermine the competitiveness of Nigerian goods in the U.S. market, particularly affecting businesses in emerging and value-added sectors.
“These measures present destabilizing challenges to price competitiveness and market access, especially for SMEs relying on AGOA exemptions,” the government statement read.
(NAN)