Dear Subscriber,
Not all shocks are created equal. Some create tremors; others redraw the global map. President Trump’s sudden 90-day pause on sweeping tariffs may have calmed Wall Street, but for emerging markets like Nigeria, the aftershocks continue to rattle trade balances, FX markets, and fiscal firewalls.
Trump’s tariff pause fails to ease market jitters
On April 9, 2025, President Trump stunned the markets by hitting the brakes on his controversial “reciprocal” tariffs. The result? A euphoric 9.5% surge in the S&P 500, tech stocks taking flight, and nearly $3 trillion restored in market capitalization overnight.
But as investors looked beyond the headline, the S&P 500 recoiled by 3.2%, erasing part of its $3 trillion pop. Why? Because the devil is in the detail. Tariffs on China, Canada, Mexico, and strategic metals like steel remain firmly in place. Only the proposed reciprocal tariffs were paused. This was not a reversal. It was a recalibration.
The bond market spooked Trump
The bond market may have forced Trump’s hand. A sharp rally in U.S. Treasury yields—triggered by Beijing’s offloading of U.S. debt—sent Washington’s debt servicing costs soaring. As bond prices crashed, yields spiked to near 5.1%, unsettling the White House. China, holding over $800bn in Treasuries, signaled its disapproval not with words, but with its wallet. The market interpreted this as an act of retaliation—and perhaps a precursor to financial decoupling. Trump’s tariff pause was less a concession and more a survival tactic.
Nigeria in Trump’s playbook
Nigeria received its own slice of Trump’s protectionist pie—a 14% tariff on its $5.7bn exports to the U.S., a market that once accounted for 11% of total outbound trade. While crude oil (92% of exports) dodged the blow, the remaining 8%—about $400mn in non-oil goods—remains vulnerable. The fallout? If the 14% tariff snaps back after the 90-day pause, non-oil exports could decline by 30%. If the oil price sustains its slip to $60pb, Nigeria may lose about $15–$25bn in export revenue and nearly $8bn in fiscal receipts. Washington slammed Nigeria for imposing non-tariff barriers that limit export opportunities for Americans. The broader message is clear: it is time to adapt or perish.
The naira takes a hit again
After a three-month bull run, the naira is losing steam—down 5% to ₦1615 in the aftermath of Trump’s tariff blitz. Although the CBN announced a balance of payments surplus of $6.8bn, this is largely buoyed by fickle portfolio inflows chasing short-term yield—not by robust export earnings or resilient FDI. With net reserves at $23bn (just 12% of GDP) and a monetary loosening cycle already underway, the naira’s resilience is being tested. If spooked foreign investors retreat from Nigerian assets, $16–$12bn in portfolio inflows could be at risk. For now, the CBN holds the line, but its arsenal is thinning.
Nigeria must brace for more volatility, even as it seeks trade realignment through AfCFTA, BRICS partnerships, and the hunt for new export destinations.
As Bismarck Rewane and the FDC Think Tank emphasize in this edition of FDC Whispers, policy agility—not panic—is the only antidote to trade shocks in a multipolar world.
Enjoy your read.
