Naira Slides Amid Heightened Global Trade Tensions Following U.S. Tariff Hike

The Nigerian naira significantly dropped against the U.S. dollar on Thursday, shortly after President Donald Trump’s administration imposed a sweeping 10% increase in global trade tariffs. 

The decision, which has already reverberated through global financial and commodities markets, contributes to growing concerns about economic instability in emerging markets like Nigeria.

According to the latest figures from the Central Bank of Nigeria (CBN), the naira depreciated by N20.75, or 1.3%, in the official foreign exchange window, settling at N1,552.53/$1 on Thursday. 

This is a notable decline from the N1,531.25/$1 recorded just a day earlier. The parallel market also mirrored this weakening trend, with the naira dropping by N5 to close at N1,560/$1, compared to N1,555/$1 on Wednesday.

The currency depreciation coincides with a slight drop in Nigeria’s external reserves, which fell by 0.3% to $38.17 billion as of April 2, 2025, based on data provided by the CBN. This marks a decline from the $38.30 billion recorded on March 28, 2025. These reserves are critical in maintaining currency stability and providing a buffer against external shocks.

Meanwhile, the global oil market also felt the ripple effects of the U.S. tariff escalation. Crude prices took a hit amid concerns that the intensified trade disputes could suppress global demand. 

Brent crude, the international benchmark, fell by as much as 3.2%, trading at $72.52 per barrel, while West Texas Intermediate (WTI) slipped below $70 per barrel. This decline poses further challenges for Nigeria, Africa’s largest oil producer, whose economy heavily relies on oil exports for revenue and foreign exchange earnings.

Although energy-related tariffs were not part of the new trade measures, the broader economic sentiment remains negative. Analysts have warned that the U.S. move could escalate tensions between major economies such as China and the European Union, disrupting global trade flows and dampening investor confidence worldwide.

President Trump’s decision to expand tariffs—following earlier rounds targeting nations like China, Canada, and Mexico—signals a more aggressive stance against what he perceives as unfair international trade practices. While the U.S. aims to rebalance its trade relationships, emerging markets like Nigeria feel the immediate consequences through capital flight, reduced investment inflows, and increased pressure on local currencies.

The situation also raises questions about Nigeria’s ability to weather external shocks, given its import dependency and volatile oil revenues. With rising import costs due to the weakening naira, inflationary pressures could intensify, complicating the Central Bank’s monetary policy and economic stability efforts.

In conclusion, the sharp depreciation of the naira reflects local vulnerabilities and the broader global financial uncertainty driven by protectionist trade measures. As the international economic landscape becomes increasingly unpredictable, Nigerian policymakers may need to adopt proactive measures to cushion the naira and safeguard economic resilience.