Trump’s Tariffs: Akutson, Fasua, Mohammed, Teriba X-ray Duties … Recommend Measures For Nigerian Economy To Navigate Tariffs

BY PATRICK WEMAMBU

Last week, US President, Donald Trump, announced an application of a base-line tariff of 10% on imports into the Big Apple from countries around the world.

Defending his measure, the president had rued that the global trading system that had been in place for decades was harming the United States and needed to be changed.

He regretted; “For decades, the United States slashed our trade barriers on other countries while those nations placed massive tariffs on our products and created outrageous, non-monetary barriers, to decimate our industries…

“Our country has been looted, pillaged, raped, plundered by other nations… Taxpayers have been ripped off for more than 50 years. But it is not going to happen anymore,” he vowed at the White House.

But experts who spoke to The Daily Times weekend on the subject warned the tariffs could destabilize the world economy.

Professor Seth Akutson, former Vice Chancellor, Green Field University, Kaduna in a telephone interview with us remarked that Donald Trump’s decision to impose tariffs was primarily driven by his ‘America First’ mantra and economic agenda. The core motivation being to reduce the U.S. trade deficit, revive domestic manufacturing and protect American industries from what he perceived as unfair foreign competition —especially from the EU, China and other countries.

His words; “Trump’s administration argued that other countries, notably EU and China, were flooding the U.S. market with cheap goods due to subsidies and lax regulations, thereby undercutting American manufacturers. For example, in the case of steel and aluminum, he cited overcapacity and government – subsidized exports from countries like China as threatening national security and domestic production. In response, the U.S. imposed tariffs of 25% on steel and 10% on aluminum imports.

“Moreover, Trump sought to renegotiate trade agreements, such as NAFTA, which he claimed disadvantaged American workers and businesses. These tariffs were used not just as protective measures but also as leverage in trade negotiations. President Trump asserted that the EU do not patronize American vehicles and other American products. The EU imposes unwholesome tariffs on US goods taking advantage of relaxed policies in the U.S.

Reacting to the argument that the Tariff rates were arbitrarily computed, Akutson objected – positing that they were determined based on industry reports, trade data analysis and investigations by bodies such as the U.S. Department of Commerce and the United States Trade Representative (USTR).

He explained: “For instance, the Trade Expansion Act allows the U.S. government to impose tariffs if imports are deemed to threaten national security. After such investigations, the administration justified the steel and aluminum tariffs on this basis.

“In cases involving China, the Trade Act was invoked. The USTR conducted a detailed investigation into China’s trade practices, including intellectual property theft and forced technology transfers. Tariffs were then strategically applied to sectors where China was deemed to be benefitting unfairly from these practices electronics, machinery, and industrial components. It depends on the metrics used. The U.S. has had persistent trade deficits with many of its trading partners, which Trump interpreted as a sign of being disadvantaged. For instance, the U.S. trade deficit with China exceeded $375 billion. However, most economists argue that trade deficits are not inherently bad and often reflect macroeconomic conditions such as high consumer demand or a strong dollar rather than unfair trade practices.”

However, while other nations may have lower labour costs or government subsidies, the U.S. benefits from global supply chains, access to cheaper inputs and a competitive services sector, the professor of economics stated. He added that the U.S. is also a dominant player in sectors like technology, finance, and aerospace, which aren’t always captured in merchandise trade statistics. Hence, while there may be sectoral disadvantages, the broader picture is more nuanced than hitherto, he submitted.

On the issue of currency manipulation which Trump accused other nations of to gain advantage over the US, Akutson charged that it occurs when a country intervenes in foreign exchange markets to artificially weaken its currency, thus creating an unfair trade advantage.

He said; “In China’s case, critics argued that the Chinese government was maintaining an undervalued Yuan by buying foreign currencies, which boosted exports and widened the U.S – China trade deficit. This, in Trump’s view, compounded the impact of cheap goods entering the U.S. and harming domestic industries.

“However, these claims are contestable. While China did engage in currency intervention in the past, many analysts believe that by the time Trump took office, China had shifted toward allowing more market-driven exchange rates. The U.S. Treasury did label China a currency manipulator but later rescinded the designation after some policy changes and commitments from Beijing.”

To him, it certainly risks doing so as it is at the moment. Tariffs often trigger retaliatory tariffs from affected countries, leading to a cycle known as “trade war.” This can disrupt global supply chains, raise prices for consumers and businesses and dampen international trade.

For example, when the U.S. imposed tariffs on Chinese goods, China retaliated with duties on American agricultural products, affecting U.S. farmers, Akutson reminisced that the European Union also responded to U.S. steel tariffs by targeting iconic American products like motorcycles.

Furthermore, it creates uncertainty for businesses investing in cross-border operations, leading to slower global economic growth.

He advised that Nigeria should indeed pay close attention to global trade tensions and tariff policies, particularly those involving major economies like the U.S. and China because of its integrated position in the global economy

Commenting on the allegation that the US is comparatively trade disadvantaged vis-a-viz nations slammed the tariffs, Dr. Tope Fasua, Special Adviser to the President on Economic Matters said; “The US may not be necessarily in a disadvantaged position in terms of its trade relations vis-a-viz nations slammed the tariffs.”

Observing that 90% of Nigeria’s exports to the USA is crude oil with solid minerals and other agricultural products, the Special Adviser regretted that AGOA has not been successful for us.

In terms of the low down, Dr. Leila Mohammed, an international relations specialist based in Abuja, maintained that Nigeria is a commodity – exporting country. If global demand drops due to a trade slowdown, commodity prices especially oil, which is Nigeria’s main export could fall. A decline in oil prices directly affects government revenue, foreign exchange reserves and economic stability, she noted.

Further, Tariffs imposed on intermediary goods and capital equipment can increase the cost of imports Nigeria depends on for infrastructure and industrial development. This could slow down economic diversification efforts, we are told.

“Global economic uncertainty from trade wars may make foreign investors more risk-averse, potentially reducing foreign direct investment (FDI) into Nigeria.

“Infact, Nigeria is gradually integrating into global supply chains, particularly in agro-processing and light manufacturing. Trade wars could reduce demand or increase costs, making Nigerian exports less competitive,” Akutson posited.

Desirous as they are in deployment as bargaining chips with trading partners, Dr. Mohammed, warned that the tariffs risk rattling financial markets around the globe.

Viewing the levies as tit-for-tat measures, she expressed concerns that the escalation can result in higher input costs for manufacturers, inflationary pressures and reduced consumer purchasing power globally.

Furthermore, she opined they could create uncertainty for businesses investing in cross-border operations, leading to slower global economic growth.

She explained; “The retaliatory tariffs by President Donald Trump will shatter the global trading system that the United States has helped to build up since the Second World War. Yet most regrettably, the duties will drive up prices with risks of rattling financial markets around the world.”

Dr. Ayo Teriba, CEO, Economic Associates, Lagos, told us in a telephone interview that however, cautioned; “I don’t think Nigerians should be agitated about the Trump’s tariffs. Because, ordinarily, tariffs are economic instruments – like interest rates, exchange rates. They are specifically taxes on trade.

They should not be used for economic purposes. (To me), Trump is using the tariffs for political purposes. America is institutional but unfortunately Trump is bypassing institutions. Trump is bypassing institutions like the Congress and Council for.

Therefore, he is not necessarily right in what he is doing. (I believe) some of these policies of his might be revised. When the backlash on the American economy (begins to take place), Trump might be forced to have a rethink. Therefore, clever countries should simply wait and see.

And observe how long this insanity will be allowed to play out within the US economy itself. My advice, countries should just wait for about 3 months to see how the policies play out. What Donald Trump is doing is stoking global uncertainty. (This is likely to affect investments).

What is going to happen to oil prices? Some investors have already began to experience losses as a result of the polices. Some investors have lost money already.

So you might find some selling off their investments – to put their money in gold or something. As global uncertainty sets in, investors will pull their portfolio funds out of countries like ours.”

Commenting on allegations by President Trump that the US disadvantaged in its trade relations vis-a-viz other nations slammed the tariffs, Dr. Tope Fasua said; ” To my mind, I don’t think the USA is disadvantaged in its trade relations with the countries that were slammed the tariffs.” Observing that 90% of Nigeria’s exports to the US is crude oil, with solid minerals and some agricultural products, Fasua lamented that AGOA has not been successful.

If Nigeria’s trading partners engage in currency devaluation to stay competitive, it could put pressure on the naira and lead to inflationary trends at home, Prof. Akutson declared.

In essence, while Nigeria may not be a direct target of these tariffs, the ripple effects can hurt its economy through reduced trade, weaker demand and tighter investment flows, he expressed.

According to the Professor of Economics, Nigeria must be proactive —diversifying its economy, enhancing trade agreements within Africa (such as AfCFTA) and improving local production capacity to withstand global shocks.

In her parting thoughts, Dr. Mohammed reiterated that the president is using tariffs – border taxes levied on imports – to tackle what he sees as “unfair” trading practices by US trading partners. The aim is to promote US manufacturing by making foreign imports more expensive; to raise revenue, and to use tariffs as a bargaining chip with trading partners. She, however, warned that tariffs risk crashing economic growth and stoking inflation

As regards how significant the tariff is to Nigeria, Dr. Fasua said; “To my mind, the 14% they have levied us is not particularly significant as to really hurt Nigeria because if it’s really crude oil and gas, these commodities also have other markets.”

On the way forward, the top government official suggested refining for the local industry or selling to fellow African nations. His words; “We’re lucky to have repositioned our refineries. We can divert crude sales to local refineries. We have to be strategic. We may not necessarily have a price war. The value of dollar may go down because nobody will want to invest in an inflation environment. Nigeria shouldn’t be agitated. No need for a knee-jack approach. We should rethink our approach.”

The Daily Times recalls that governments across the world have been preparing to retaliate, increasing the potential for a destabilizing economic battle that drives up costs as Mr. Trump tries to force supply chains back to the United States.

The new tariffs will also not apply to products that Mr. Trump has already hit with separate levies, including steel, aluminum, and vehicles and their parts. Energy and “other certain minerals that are not available in the United States” will also be excluded.

Some of the highest rates will be levied on smaller countries, with goods from the southern African nation of Lesotho facing 50 percent.

Governments across the world have been preparing to retaliate, increasing the potential for a destabilizing economic battle that drives up costs as Mr. Trump tries to force supply chains back to the United States.

Some governments have responded to Mr. Trump’s threats by rolling back their own tariffs.