President Donald Trump’s recent threat to intervene in Nigeria in response to the alleged “killing of Christians” has significant ramifications for Nigeria-US relations, particularly with regard to its negative effects on the current economic reforms, the recent 15% import duty on petroleum and diesel imports, and the potential to strengthen Nigeria’s economic ties with China. The US will be largely impacted by this move toward BRICS in general and China in particular because it will increase rivalry for influence in Africa, put the dollar’s economic standing in jeopardy, and create vulnerabilities relating to trade imbalances and debt.Therefore, the recent threat of involvement has caused Nigeria-US relations to deteriorate, which is a direct result of the larger war for global economic domination. The following are some possible drawbacks for Nigeria:a decrease in foreign direct investment (FDI), which would cause American investors to take a cautious stance toward developing nations like Nigeria and instead concentrate on home prospects. Due to the seriousness of the accusations, which raise reputational risk and force multinational corporations to postpone or halt investment choices in industries including energy, telecoms, agribusiness, and fintech, foreign direct investment may also be more vulnerable than it was previously. According to official figures from the Office of the U.S. commerce Representative, bilateral commerce in goods and services reached around $13 billion in 2024. The United States is still Nigeria’s most important economic partner.Therefore, trade financing, energy exports, defense purchases, and humanitarian programs might all be impacted by Trump’s vow to reduce “aid and assistance.” A suspension of Nigeria’s eligibility under the African Growth and Opportunity Act (AGOA), which grants duty-free access to US markets for African commodities, would be even riskier. Nigeria’s efforts to increase non-oil exports, especially in textiles, agro-processing, and light manufacturing, could be severely hampered by such a move. Due to increased demand for cashew, urea, and cocoa worldwide, the nation’s export council has recorded an almost 20% increase in shipments during the first half of 2025. These precarious advantages could be lost if Western importers start to hesitate or reroute shipments. Even before a single sanction is applied, Nigerian commodities will become less competitive due to higher insurance premiums and more expensive trade credit.decrease in portfolio inflows because investors may view Nigeria as a high-risk nation as a result of the US President’s comments, which might have a big effect on Nigeria’s intentions to issue Eurobonds worth roughly $2.3 billion later this year. As outflows drive up domestic yields, increase borrowing costs, and deteriorate the currency-debt service dynamic, fiscal stability may also deteriorate. As a result, Nigeria’s reputation could be further harmed by the global spread of Trump’s comments, which could also have an adverse effect on rating agencies and multilaterals.Despite efforts to diversify Nigeria’s economy, oil and gas continue to be the country’s main source of income, supporting both government coffers and foreign exchange reserves. At a time when Nigeria is struggling to reduce its fiscal deficit, any increase that interferes with production, shipping, or insurance coverage will constrain currency inflows. A Nigeria-specific disruption could tighten the global market for light-sweet crude, potentially raising prices but paradoxically making Nigeria poorer because its output will decrease as a result of the intervention or because buyers demand steep discounts, even though the International Energy Agency (IEA) projects that OPEC+ supply is expected to rise in 2025. This would result in lower revenue and increased economic vulnerability for Nigeria, which might lead to widening budgetary gaps and the need for further borrowing at exorbitant rates or more austerity.Increased inflationary pressures and decreased foreign reserves as a result of capital outflows will occur if the threat materializes. The Central Bank of Nigeria’s (CBN) attempts to stabilize the naira and control inflation expectations may also be hampered by the increase. Higher global risk aversion may limit the impact of the regulator’s efforts to attract portfolio inflows through high-yield securities and FX window reforms. As a result, the naira may see significant downward pressure as outflows increase, possibly necessitating more extensive CBN intervention. Muhammad Muttaka Usman is a member of the Daily Trust Board of Economists and an economics professor at Ahmadu Bello University in Zaria.
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