ICIR
ON the heels of Donald Trump’s success in the just concluded US Presidential election, global geopolitics and economic alignments are currently ongoing with Nigeria not left out.
Trump’s victory in key states put him within the reach of the 270 electoral votes needed to secure the presidency.
Already, Trump’s victory and now President-elect has triggered some global economic and geopolitical realignments with Nigeria not being left out.
The ICIR reports that global stock markets, dollar, and oil price appreciations at the international market have all been touted as the major impact of Trump’s electoral victory.
According to Reuters, the victory in the U.S. presidential election unleashed a massive rally in the dollar, drove stocks to record highs, and punished bond prices as expectations of tax cuts and tariffs on imports drove optimism about economic growth while fuelling worries about inflation.
U.S. equity indexes soared, with the benchmark S&P 500 up 2.51 per cent to a record high and huge gains in areas such as small-cap stocks and banks that are poised to benefit from Trump’s expected lighter regulatory touch.
To state the least, ‘Trump’s American First’ philosophy expected to have huge effects on the Nigerian economy with possible withdrawal from the climate change agreement also going to have huge impacts on the Nigerian economy.
In this report, The ICIR looks further into some economic and geo-political implications of Trump’s presidency to Nigeria.
Key economic areas expected to be impacted.
1. A stronger dollar to impact on more weakening of the Naira
Expectedly, the dollar is already strengthening as a result of Trump’s victory. Industry analysts believe a strong dollar would weaken the naira with Trump’s administration expected to deepen homegrown economic policies that would affect import-dependent countries like Nigeria.
Furthermore, Trump’s administration’s proposal to impose tariff on domestically produced goods will impact negatively again on the naira as Nigeria is largely an import dependent country. This would likely pile up pressure on the naira while affecting the $10.6 billion trade volume between the two countries.
Already, Nigeria’s naira has depreciated over 45 per cent this year and an appreciation of the dollar will weaken the naira, impacting import costs, inflation, and purchasing power as already being witnessed.
2. African Growth and Opportunities Act (AGOA)’s imminent withdrawal
AGOA is a piece of legislation approved by the United States of America in the year 2000 which promotes duty-free access to the United States market and has helped to increase trade volume between Nigeria and the United States.
However, this policy which has helped surge Nigeria’s bilateral trade with the United States to over $10.6bn could be halted as a result of Trump’s disposition to discontinue the policy in 2025.
3. Energy Independence
Trump’s coming could also see more exploration of America’s oil and less purchase of Nigerian oil, informed analysts said. This would inadvertently affect Nigeria’s trade with the United States with oil still serving as the mainstay of the nation’s economy.
4. Reduction of aid to Nigeria and Africa
Trump’s second coming is expected to prune down aid to Nigeria and other African countries with priority on his American first policy. Nigeria largely relies on aid from developed economies such as the United States for most of its polices and programmes.
5. Impact on trade relationship
Furthermore, Trump’s “Buy American” policy has often focused on reducing imports and increasing tariffs, which could impact Nigeria’s trade relationship with the U.S.
In the first half of 2024, Nigeria recorded a trade surplus with the U.S., with imports at N1.9 trillion and exports at N3.1 trillion.
If Trump’s tariff policies discourage U.S. imports from Nigeria, this could negatively affect Nigeria’s export earnings, particularly for sectors like oil, minerals, and agricultural products.
A decrease in exports to the U.S. might impact Nigeria’s current account balance, further complicating its exchange rate and foreign reserve challenges.
Diplomatic experts speak on geo-politics concerns
Some Nigerian diplomats who spoke in response to Trump’s Victor said there’s going to be a global upset in geo-politics.
Former Nigerian Ambassador to the United States, Joe Keshi, who spoke on the development said, “Several world leaders would be strategising on how best to deal with Donald Trump in the next four years.
“For some world leaders who were around when he did it the first four years might be having some nightmares with his second coming as a result of his approach to governance.
“America has a global influence and most World leaders must find a way to work with him. The truth of the matter is that it’s going to be a stormy four years,” he stressed.
He further said that some presidents who had worked so well with him in his first tenure and whom he considered as allies may not have issues, adding that, “President of Ukraine would be going through some tough thinking because of his stance on Russian-Ukraine wars.
For Nigeria, Ambassador Keshi notes that Nigeria has a cordial…
