In today’s interconnected world, economic policies in one region send shockwaves across continents. Global trade is like a web; smaller economies feel the ripple effects when two big players fight. The renewed and intensified tariff war between the United States and China in 2025 presents urgent lessons for developing economies. What began years ago as a bilateral dispute over trade imbalances and industrial competitiveness has evolved into a full-blown economic confrontation that is disrupting supply chains, raising consumer prices, and creating fresh uncertainty across global markets.
As these two economic superpowers escalate tariffs on each other’s goods, with the United States now imposing duties as high as 145 per cent on Chinese imports and China responding with 125 per cent tariffs on American products, the rest of the world feels the impact. This volatile environment highlights the urgent need to reform Nigeria’s tariff system, a country heavily reliant on imports for both consumer and industrial goods. Tariffs must serve as deliberate tools to strengthen the economy and protect national welfare, beyond their role in revenue generation.
Understanding the 2025 Trade War: A Fight Beyond Trade
The United States and China remain locked in an intense rivalry that now extends beyond simple trade disputes. In 2025, new tariffs were introduced targeting sectors such as electric vehicles, semiconductors, green technology, and critical minerals. Citing national security risks and the need to protect economic resilience, the United States raised tariffs on Chinese goods to an unprecedented 145 per cent. At the same time, China retaliated with 125 per cent tariffs on US exports, including agricultural products, aerospace components, and rare earth materials.
Reports from the IMF and World Bank meetings held in April 2025 confirm that this escalation has further disrupted global supply chains, contributed to inflationary pressures, and weakened business confidence around the world. According to a study by The Budget Lab at Yale University, the cumulative effect of all U.S. tariffs enacted in 2025 is projected to raise consumer prices by approximately 2.3% in the short term. This increase translates to an average annual cost of $3,800 per household in 2024 dollars.
Further analysis from the same institution suggests that, when considering additional factors and assuming no policy reaction from the Federal Reserve, consumer prices could rise by 3.0% in the short term. This scenario would result in an average annual cost of $4,900 per household in 2024 dollars. Meanwhile, China’s countermeasures have significantly affected key American industries and slowed global economic recovery.
For Nigeria, these developments send a clear signal. The global trading environment is becoming more unstable, and a heavy dependence on imported goods without a strategic trade policy exposes the economy to serious risks.
Nigeria in the Middle: Passive Observer or Active Strategist?
Although Nigeria is not directly involved in the US-China conflict, it cannot escape the consequences. Nigeria imports many goods from China, ranging from electronics and industrial machinery to pharmaceuticals and agricultural inputs. As shipping costs rise and supply chains weaken under new tariffs, Nigerian businesses and consumers face increasing costs and reduced access to critical goods.
According to the National Bureau of Statistics, Nigeria’s total imports reached 35.92 trillion naira in 2023, with China accounting for over 14.61 per cent. Furthermore, the volatility of foreign exchange markets, worsened by global uncertainty, places additional pressure on Nigerian importers and consumers.
The pressing question is clear. Will Nigeria continue to react passively to global economic tremors, or will it adopt proactive, strategic trade policies to safeguard and develop its economy?
Rethinking Tariffs: A Strategy for Economic Development
Nigeria’s current tariff policies have primarily focused on revenue generation. Although customs duties remain an important source of government income, this approach often fails to protect domestic industries or stimulate meaningful local production.
Given the changing global landscape, Nigeria must reimagine its use of tariffs. Tariffs should become active instruments for economic development. Strategic application can protect vulnerable sectors, encourage local manufacturing, attract investment, and create jobs.
Countries such as Brazil, India, and Vietnam have successfully balanced selective protection with openness, fostering industries that are now competitive on the global stage. Nigeria must take similar steps, adapting these lessons to its unique economic context.
Building a Smart Tariff Strategy: Lessons for Nigeria
A development-focused tariff framework for Nigeria should be anchored on several key principles:
1. Segmented Tariff Policy: Differentiate clearly between essential and nonessential imports. Higher tariffs should be applied to luxury goods such as exotic vehicles, premium alcohol, jewellery, watches, yachts, private jets, and boats. Lower tariffs should be applied to industrial equipment, raw materials, and other critical inputs to support domestic production.
2. Time-Bound Protection: Offer temporary tariff protections for sectors such as agro-processing, textiles, pharmaceuticals, and renewable energy manufacturing. This gives industries time to become competitive before opening them fully to global markets.
3. Regional Trade Expansion: Use the African Continental Free Trade Area (AfCFTA) to build regional supply chains, diversify export markets, and reduce overdependence on distant economies like China and the United States.
4. Customs Modernisation and Transparency: Improve customs efficiency to reduce corruption, smuggling, and bureaucratic bottlenecks. A transparent trade environment encourages business compliance and supports long-term investment.
5. Policy Consistency: Avoid frequent changes to tariff rates and import regulations, which create uncertainty for investors. Nigeria must pursue a stable, long-term industrial tariff policy aligned with national development goals.
A Tariff Policy That Supports Nigerians
The core objective of a strategic tariff policy is to improve the’ quality of life for Nigerians. Reducing reliance on expensive imports can lower inflation, stabilise the currency, boost local manufacturing, and support job creation. According to the National Bureau of Statistics, the unemployment rate dropped significantly to 4.3 per cent in the second quarter of 2024. However, challenges remain, and structural reforms are critical for national progress.
If complemented by investment in infrastructure, energy, and skills development, Nigeria can reposition itself as a manufacturing hub within West Africa, attracting foreign investment and strengthening economic resilience.
This approach is not about isolation. It is about creating intelligent resilience. A well-designed tariff system can shield emerging industries while ensuring that consumers continue to access affordable, high-quality products. Finding this balance is vital for long-term prosperity.
Conclusion
The 2025 US-China trade war is not merely a geopolitical rivalry. It demonstrates how tariffs can be used strategically to shape national economic futures.
The lesson for Nigeria is clear. Tariffs must become active instruments of industrial policy, trade competitiveness, and economic resilience. They must support local enterprise, shield the economy from global shocks, and foster sustainable growth.
Nigeria’s future prosperity depends on shifting from passive observer to strategic actor. Strategic tariff reform is not a choice in a world increasingly defined by shifting alliances and economic power plays. It is a necessity.
Pcl. can assist Nigeria by providing expert guidance in designing and implementing a strategic tariff policy that aligns with the country’s economic goals. This would include conducting in-depth analyses of global trade dynamics, such as the impact of the US-China trade war, and recommending targeted tariff adjustments to protect key industries, encourage local manufacturing, and reduce reliance on expensive imports.
pcl. can also offer insights on strengthening Nigeria’s trade resilience, advising on infrastructure investment, regional trade expansion (e.g., through AfCFTA), and ensuring customs efficiency, ultimately helping Nigeria navigate global economic uncertainties and promote sustainable growth.
Written by:
Sunday Kolawole
Analyst