The 14% customs duties enforced by President Donald Trump against Nigerian exported goods such as cocoa and fertilizers and ginger will negatively affect the banking sector of Nigeria.
The pending tariff suspension extends to 90 days before it takes effect but may cause disturbances to trade finance operations that produce bank income.
First Bank and Access Bank as well as Nigerian Export-Import Bank (NEXIM) serve as major institutions in Nigerian trade finance space by extending financial services for payment guarantees and credit and insurance solutions to international and domestic importers and exporters. The African Development Bank Group (AfDB) reports that trade operations produce approximately 15% of the total bank profit.
The African Growth and Opportunity Act (AGOA) legislation gave Nigerian exporters free trade entry for commodity segments, including manufacturing and agricultural sectors.
The specified time extinguished Nigerian exporters and their funding institutions are currently in danger. The market decline in trade activities because of U.S. buyer withdrawal will create pressure on banks that manage trade financing since their profit margins will likely be reduced.
As a major money-earner, banks obtain their revenues from trade financing operations. A former leader of the Central Bank of Nigeria’s Trade and Exchange department declared that banks value foreign exchange inflow more than obtaining interest earnings from credit distributions.
Export activities attract bankers since incoming foreign exchange enters exporters’ domiciliary accounts from their deals. The banks continuously search for large foreign exchange inflows because it enables them to perform their duties as FX sellers to buyers.
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Crude petroleum together with petroleum gas serve as the primary export items Nigeria sends to the United States. The country exports several products such as nitrogenous fertilizers and cocoa beans and ginger and oil seeds and oleaginous fruits in addition to energy-related products. According to National Bureau of Statistics data non-oil exports increased by more than 300% from ₦86.4 billion ($54.9 million) in 2023 to ₦309.1 billion ($196.6 million) in 2024.
The high costs caused by tariffs might encourage US importers to either postpone their supply purchases from Nigerian companies or reduce them completely. Cutting down on trade finance operations would diminish letter of credit applications thus decreasing foreign currency trades and bank revenue from trade activities.
The value of the naira has remained stable since December 2024 because fewer dollars enter the market though recently it has become unstable. The weakened Nigerian currency elevates the expenses of imported products while creating additional risks for banking institutions during times of heightened inflation.
Banks will encounter significant transformations through the implementation of trade finance services according to Tajudeen Ibrahim who leads research and strategy activities at Chapel Hill Denham.
On April 9, 2025, the Nigeria Foreign Exchange Market recorded a decrease in the naira value reaching ₦1,639.3 per dollar while the exchange rate stood at ₦1,531.6 as reported on April 2. CBN used $197.71 million of authorized dealers’ purchases to sustain the value of the naira.
Ibrahim advocated that financial institutions should utilize the present weakened status of the naira currency to increase exports across different African countries. “The essential path for Africa’s development lies within intra-African trading activities” according to his statement. Enhancing trade between neighboring nations will decrease African countries’ requirement of external global markets.
The fundamental danger for Nigerian banks stems from the gradual loss of their fundamental transaction channels combined with an important revenue stream after Trump implemented his export tariff policy. The current scenario opens possibilities to develop African business within the region while spreading economic risks across multiple markets along with strategic improvements for future trade funding despite US policy changes.
