Hot Source•American manufacturers kick
•CPPE: Trade war will disrupt global supply chain, impact AGOA
Emmanuel Addeh in Abuja and Dike Onwuamaeze in Lagos
US stock markets tumbled yesterday as investors analysed the sweeping change in global trading following Donald Trump’s announcement of a barrage of tariffs on the country’s trading partners.
All three major US index funds were down as trading started in the morning. The tech-heavy Nasdaq fund was down 4.5 per cent, while the S&P 500 and the Dow dropped 3.4 per cent and 2.7 per cent at opening, respectively.
Apple and Nvidia, two of the US’ largest companies by market value, had lost a combined $470bn in value by midday, the Guardian UK reported.
Meanwhile, the US dollar hit a six-month low, going down at least 2.2 per cent compared with other major currencies as the flawed tariff calculations stunned economists.
Though the US stock market has been used to tumultuous mornings over the last few weeks, US stock futures – an indication of the market’s likely direction – had plummeted after the announcement.
Hours later, Japan’s Nikkei index slumped to an eight-month low and was followed by falls in stock markets in London and across Europe.
The White House drafted up a list of countries, including some of its largest trade partners and ones uninhabited by humans, that will be receiving reciprocal tariffs. Many economies will see new tariffs above 20 per cent, including the EU, China, Japan and Taiwan. Nigeria will get 14 per cent.
The 10 per cent baseline tariff will go into effect on April 5, while the reciprocal tariffs will begin on April 9, according to the White House.
As markets fell, Trump posted to Truth Social: “The Operation is Over! The Patient Lived, and is Healing. The Prognosis is That the Patient Will Be Far Stronger, Bigger, Better, and More Resilient Than Ever Before. Make America Great Again!”
Economists have for months warned that high tariffs are a major risk to the US economy, pushing prices up for consumers on everything from cars to wine along with destabilizing the US’s role in the global economy.
But that didn’t stop Trump from taking a celebratory tone at the event he dubbed “liberation day”. Trump tried to paint the tariffs as the start of “the golden age of America”. “We are going to start being smart and we’re going to start being very wealthy again,” Trump said.
Yesterday, Howard Lutnick, the Commerce Secretary, defended the move. “The president is not going to back off what he announced yesterday. He is not going to back off,” he told CNN.
Multiple major American business groups have spoken out against the tariffs, including the Business Roundtable, a consortium of leaders of major US companies including JP Morgan, Apple and IBM, which called on the White House to “swiftly reach agreements” and remove the tariffs.
“Universal tariffs ranging from 10-50 per cent run the risk of causing major harm to American manufacturers, workers, families and exporters,” the Business Roundtable said in a statement.
“Damage to the US economy will increase the longer the tariffs are in place and may be exacerbated by retaliatory measures,” it added.
In a statement, the National Retail Federation, a lobbying group for the retail industry, said that the new tariffs negatively affect the business environment for retailers, according to the UK Guardian report.
“More tariffs equal more anxiety and uncertainty for American businesses and consumers. While leaders in Washington may not care about higher prices, hardworking American families do,” the group said.
Contrary to what Trump has said about the jobs the tariffs will create, the National Association of Manufacturers said that tariffs actually “threaten investment, jobs, supply chains and, in turn, America’s ability to outcompete other nations and lead as the preeminent manufacturing superpower”.
The tariffs also appear unpopular among voters. A poll released on Wednesday ahead of Trump’s announcement found that just 28 per cent of Americans believe tariffs help the economy, while 58 per cent believe the impacts will be damaging.
But in his speech yesterday, Trump appeared ready to be defiant against any criticism.
“In the coming days, there will be complaints from the globalists and the outsources and special interests and the fake news,” he said. “This will be an entirely different country in a short period of time. It’ll be something the whole world will be talking about,” he added.
Meanwhile, the Centre for the Promotion of Private Enterprise (CPPE) has stated that the ongoing trade war orchestrated by the US President, Trump, would disrupt global supply chains and shut down the African Growth and Opportunity Act (AGOA) that was approved by the US Congress in May 2000.
This was declared yesterday by the Chief Executive Officer of CPPE, Dr. Muda Yusuf, who said that the trade war might hurt Nigeria’s foreign reserves if it happens to cause a slump in the international oil market.
Yusuf said: “The vulnerability of the Nigerian economy to shocks of the current trade war unleashed by President Trump may be very limited. Averagely, Nigeria’s external trade exposure to the United States is about 10 per cent.
“However, the Nigeria economy may be affected indirectly in some other ways. Trump’s administration has practically brought closure to the AGOA trade window. Secondly, the trade war and the subsequent retaliatory tariffs would trigger inflationary pressures in the US. This may result in elevated costs for imports into Nigeria from the US.
“Thirdly, we are likely to witness some level of disruptions in global supply chains resulting from the tariff war. This could dampen the global growth outlook and affect crude oil price. A decline in oil price would impact Nigeria’s foreign reserves and revenue.”
He added that the worsening inflation outlook for the US economy might trigger monetary tightening by the US Federal Reserves, which may lead to higher interest rates that could trigger portfolio flow reversals in emerging economies, with implications for naira exchange rate.
Yusuf, however, noted that there could also be opportunities for new trade partners globally as countries that are victims of the current trade war would seek new bilateral trade relationships which may create opportunities for Nigerian investors.
Analysing Nigeria’s trade relations with the US, Yusuf said that in 2024, Nigeria’s total merchandise export was valued at $50.4 billion and Nigeria export to the US the same year was $5.7 billion, which was 11.3 per cent.
“Tariff effect on about 10 per cent of total export is unlikely to cause a major upset in the Nigerian economy. Nigeria’s major exports to the USA are crude oil, petroleum gas and nitrogenous fertilisers, while major US exports to Nigeria are mainly vehicles, wheat, and fuels,” he stressed.
