In perhaps one of the greatest political comebacks in recent history, Donald Trump has done what many thought was impossible: he has clinched the US presidency once again. As Nigerian analysts begin to look back at Trump’s impact on the Nigerian economy in his previous run, things are shaping up already on the global scale. 

After a tumultuous first term that ended in 2021, and a period where his political future seemed uncertain, Trump’s re-election in 2024 has sent shockwaves through the global economy. 

For Nigeria, a country already battling economic instability, Trump’s re-election presents both challenges and opportunities—especially in light of the current state of the naira.

Though much of the world is focused on how Trump’s domestic policies will unfold, Nigerians are keenly watching how his economic and foreign policy decisions will reverberate across the Atlantic. With the naira losing over 70% of its value since mid-2023, inflation skyrocketing, and social unrest on the rise, Trump’s influence could either further strain or stabilize the country’s economy.

The Pre-Trump Context

Nigeria’s economy, already grappling with internal challenges, has been on rocky terrain since the Tinubu led administration introduced the FX floating regime in an attempt to bring stability to the naira. The policy was intended to attract foreign investment and reduce the central bank’s costly interventions in defending the naira’s value. 

However, the results have been mixed at best. The naira has continued its downward spiral, with black market rates crossing the N1,700 mark against the U.S. dollar. Inflation has surged to a 30-year high, and everyday Nigerians are feeling the squeeze as their purchasing power diminishes.

Against this backdrop, understanding Trump’s impact on the Nigerian economy and how his return could affect it in the coming months becomes more crucial than ever. From his stance on oil production to trade tariffs and foreign investment policies, Trump’s presidency will influence global markets in ways that will either worsen or alleviate Nigeria’s ongoing economic crisis.

U.S. Energy Independence and Nigeria’s Oil Revenues

One of the most direct ways in which Trump’s presidency could affect Nigeria is through oil. As the world’s 11th-largest oil producer, Nigeria’s economy is heavily dependent on its oil exports. Trump’s first term was marked by a push for U.S. energy independence, and his return to power signals a potential continuation of this policy. While energy independence might be beneficial for America, it poses a significant threat to oil-exporting countries like Nigeria. Increased U.S. oil production could lead to a global  oversupply, driving down oil prices.

For Nigeria, lower oil prices directly translate into reduced revenue, putting further strain on the naira. With oil being the backbone of Nigeria’s foreign exchange earnings, a drop in global oil prices could cause the naira to depreciate even faster. This would make imports more expensive and worsen inflation, further eroding the purchasing power of Nigerians.

However, there is a flip side. If Trump’s energy policies lead to geopolitical tensions—such as increased sanctions on oil-producing nations like Iran or Venezuela—it could reduce global supply and push oil prices higher. In such a scenario, Nigeria could benefit from higher oil revenues, providing some much-needed support to the naira.

The Battle for Foreign Capital

Trump’s administration will likely play a crucial role in shaping the flow of foreign direct investment (FDI) into emerging markets like Nigeria. Trump will probably prioritize domestic economic growth over international trade and investment, making U.S. policies more insular. This move will divert global capital flows away from frontier markets like Nigeria, which already struggle to attract sufficient foreign investment.

On the other hand, Trump will likely pressure the Federal Reserve to maintain or reduce interest rates, given his outspoken criticism of the Fed’s interest rate policies. This could have an unexpected benefit for Nigeria, as lower U.S. interest rates might encourage investors to seek higher yields in emerging markets, potentially boosting investment in Nigeria.

Trade and Tariffs

Trump’s stance on trade and tariffs is another aspect of consideration. During his first term, Trump notoriously imposed tariffs on major trading partners, most notably China. Trump’s protectionist trade policies strengthened the U.S. dollar by making American exports more competitive and reducing the trade deficit. While this might be good for the U.S., it has dire implications for countries like Nigeria.

If Trump resumes his protectionist policies, he will likely strengthen the U.S. dollar further, weakening the naira. This will lead to higher import costs, increased inflation, and continued erosion of Nigerians’ purchasing power. The Tinubu administration’s floating FX regime will face increased pressure as Nigeria’s demand for dollars outstrips supply, driven by fuel imports, foreign tuition, and overseas travel.

Geopolitical Stability and Its Domino Effect

Finally, there’s the issue of geopolitical stability. Trump’s presidency is often associated with an unpredictable approach to international relations, and his second term will likely be no different.

Take for instance, the ongoing Russia-Ukraine conflict. The war, which has had profound global economic implications—including disruptions in food supply chains and a surge in energy prices—has directly affected Nigeria. Rising global energy prices, for example, have increased the cost of fuel imports, further straining Nigeria’s foreign reserves and contributing to the naira’s depreciation.

Trump’s approach to the Russia-Ukraine conflict could significantly impact global markets and, by extension, Nigeria’s economy. During his first term, Trump was criticized for his perceived “coziness” with Russian President Vladimir Putin. 

If Trump adopts a more lenient stance toward Russia or pushes for a quick resolution that favors Russian interests, it could ease some of the global economic pressures that have resulted from the war, such as high energy and food prices. This would, in turn, benefit Nigeria by stabilizing global supply chains and possibly alleviating some of the inflationary pressures.

However, the opposite could also be true. Trump’s unpredictable foreign policy could lead to escalations or new tensions, which would likely amplify the global economic crisis. This resulting geopolitical instability could keep energy and food prices high, further straining Nigeria’s economy. The naira, already on life support, could face even greater downward pressure as the country struggles to balance its import costs with dwindling reserves.

Final Thoughts

Conclusively, the full extent of Trump’s impact on the Nigerian economy will definitely unfurl in the coming months. Trump’s protectionist policies, his stance on global trade, and his influence over U.S. monetary policy could all contribute to a stronger dollar, which would put immense pressure on the naira. Nigeria, already facing significant economic challenges, will need to navigate this new reality with caution.

If Nigeria can position itself as a key trading partner or attract foreign capital seeking higher returns, the Trump presidency could offer a lifeline to the struggling naira.

In the end, the political comeback of Donald Trump is more than a U.S. story—it’s a global one. And for Nigeria, the stakes couldn’t be higher.

Bravewood provides Nigerian professionals with low-risk, high-return investment products, licensed by the Central Bank of Nigeria.