The global economic order that has guided international trade for the past 8 decades is undergoing a dramatic reset. Long standing rules are being challenged, and a new playbook is yet to emerge.
Since late January 2025, the United States has launched a flurry of tariff measures, starting with levies on imports from Canada, China, and Mexico and extending into key sectors such as technology, steel, and autos. The escalation climaxed on April 2, when the U.S. imposed near-universal tariffs, sending its effective tariff rate soaring beyond levels seen during the Great Depression.
The response was swift and global. China, the EU, and other major economies rolled out retaliatory tariffs, pushing global trade costs to their highest in over a century. As protectionist fervour spreads, the world finds itself in a precarious state: the familiar framework of globalisation is fracturing without a clear replacement.
Tellingly, while 2024 delivered modest global growth, it fell short of expectations. Now, hopes for a stronger 2025 rebound are dimming under the weight of trade wars, economic nationalism, and policy uncertainty. Investors are jittery. Supply chains are disrupted. And countries are scrambling to adjust to a new era where global cooperation is giving way to competitive self-interest.
The trade world has changed—and there’s no going back.
The economic fallout
The global trade war, ignited by the United States’ sweeping tariffs in April 2025, has sent shockwaves through commodity markets—with oil at the epicenter. Crude prices have grown increasingly erratic, reacting to supply chain disruptions, retaliatory measures, and the deepening U.S.-China standoff. For oil-dependent economies like Nigeria, this volatility is more than a market hiccup—it poses a serious threat to fiscal stability.
With over 80% of Nigeria’s government revenue tied to oil exports, even modest price swings can derail budget forecasts and strain public finances. The ripple effects have been swift. Investor confidence has faltered, global supply chains remain fractured, and capital is flowing toward more stable environments.
Nigeria faces a dual challenge: shielding itself from the fallout while transforming its economy for the long haul. Policymakers are under pressure to craft “tariff-proof” strategies—scaling up domestic production, diversifying export markets, and reducing over-reliance on external shocks.
Meanwhile, the demands of over 220 million Nigerians continue to mount. Inflation remains elevated, unemployment is persistent, and the social contract is under strain. Balancing reform with stability is no small task.
Still, this is a moment of reckoning—and opportunity. Decisions made now will shape Nigeria’s economic path not just in 2025, but for years to come.
Q2 as the economic litmus test
As the second quarter of 2025 unfolds, Nigeria finds itself at a defining economic crossroads, buffeted by the reverberations of a rapidly shifting global trade landscape. For Nigeria, the global trade upheaval and oil market volatility represent a double-edged sword. On one hand, the shifting landscape presents an opportunity to rewire the economy toward resilience and diversification. On the other, it exposes deep fiscal vulnerabilities.
The International Monetary Fund (IMF), at its 2025 Spring Meetings in Washington D.C., projected that crude oil would average $66.94 per barrel this year and $62.40 in 2026—a stark contrast to the Nigerian government’s benchmark of $75 per barrel used to structure its 2025 budget. This pricing gap threatens to widen an already strained fiscal deficit.
As outlined in Nigeria’s Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), the country’s fiscal health is tightly tethered to oil earnings. With this bearish outlook, the government faces mounting pressure to aggressively boost non-oil revenues—especially from agriculture, infrastructure, and industry.
However, managing competing resource demands remains a daunting task. The administration must juggle political commitments with the urgent need for economic reform. And with the IMF also marking down Nigeria’s GDP growth projection to 3%, the stakes are even higher.
Will Nigeria seize the moment to solidify its promise, or will external pressures and internal hurdles stall progress? The world is watching—and so are millions of Nigerians betting on a brighter future
In essence, what’s in it for Nigeria is clear: a wake-up call to act boldly—or risk being caught flat-footed by a rapidly changing global economy.
Policy Response: Crossroads or Catalyst?
Nigeria stands at a crucial decision point—either continue reacting to external shocks or use this moment as a catalyst for bold, strategic reform. The global trade realignment has exposed the fragility of oil-dependent economies and underscored the urgent need for a domestic economic reset.
Key among the reforms is the overhaul of Nigeria’s tax system to boost non-oil revenue and reduce fiscal reliance on volatile crude markets. Expanding the tax net, eliminating leakages, and improving compliance are imperative. Equally pressing is the need to diversify exports and deepen local value chains, especially in agriculture, solid minerals, and manufacturing.
However, the road to reform is politically fraught. With rising public expectations and an election cycle always looming, aligning short-term political incentives with long-term economic sustainability remains a daunting task for policymakers.
Still, Nigeria can leverage this global shift. Strengthening trade within Africa under the AfCFTA, and pursuing South-South partnerships with emerging markets in Asia and Latin America, could help cushion external shocks. These regional ties may offer more stability and bargaining power than traditional dependence on Western markets.
This is more than a policy choice—it’s a defining test of vision and resolve. Nigeria must choose whether this crisis becomes a crossroads—or a transformative catalyst.
