Experts have predicted that the ongoing trade war will significantly impact the economies of Nigeria and other emerging markets.
Earlier this week, U.S. President Donald Trump imposed 25% tariffs on goods from Mexico and Canada, as well as 20% tariffs on imports from China.
This fresh round of duties on Chinese goods doubled an initial set of tariffs placed on China last month. In response, China imposed additional 15% duties on U.S. imports, including chicken, pork, soy, and beef, and expanded controls on doing business with key U.S. companies. Canada has also responded with its own measures.
Possible slowdown in U.S. growth
Speaking on the Drinks and Mics podcast, Samson Esemuede, MD/CIO of Zrosk, forecasted a slowdown in U.S. growth relative to the rest of the world, regardless of whether the tariffs continue or are lifted.
You can watch the full video here:
He expressed skepticism about the uncertainty created by Trump’s policy actions, noting that markets thrive on certainty.
According to Esemuede, there will be a relative deceleration in U.S. growth, while markets like China and Europe, which have underperformed post-COVID, may surprise on the upside.
“So, within that context, I felt like relative growth rates for the rest of the world in favor of the rest of the world, we pull capital out of the US, which is why when we did our buy-hold sell, I had a sell on the US, and then that leads to a weakening dollar, and the weakening dollar should basically benefit emerging markets and frontier markets, and by extension, Nigeria should benefit from that.
He added, “If that continues, that would be the case. However, there is a risk that is now evolving. My assessment of the US recession for 2025 was probably a 5% to 10% probability that the US would go into recession because the economy was so strong and consumer spending was very healthy. And now, I think with what is happening with Trump, the uncertainty, the impact on inflation, the probability of a recession is probably around 30% to 35% probability. If that stays and we don’t go into a recession, but we see a material slowdown in US growth, I think that’s positive for Africa and that will be positive for Nigeria.”
However, Esemuede warned that if the U.S. goes into a recession, it will negatively affect everyone because the dollar will strengthen as there will be a flight to safety.
Weak dollar beneficial for emerging markets
Chief Investment Officer at Cordros Capital LTD, Arnold Dublin-Green, shared a similar view. According to him, a weak dollar is beneficial for emerging markets.
“A weak dollar also means our commodity prices are good. Commodity exports in countries like us, like Ghana (gold), South Africa, Kenya exports flowers. It’s good for Africa. It’s good for EM. So we all have the same view.”
He added, “And that’s the crowded trade that you’re seeing right now. Everyone’s saying, ‘Okay, hold on a minute. It’s a weak dollar we’re going into. Let me look for cheaper assets in countries that export commodities. Our external debts also get serviced, so it’s better for us. So weak dollar, where it’s going right now, looks positive for us.”
What you should know
- On Wednesday, China’s Premier Li Qiang announced that China would again boost its defence spending by 7.2% this year and warned that “changes unseen in a century were unfolding across the world at a faster pace.” This increase was expected and matches the figure announced last year.
- Leaders in Beijing are trying to send a message to people in China that they are confident the country’s economy can grow, even with the threat of a trade war.
- China has been keen to portray an image of being a stable, peaceful country in contrast to the US, which Beijing accuses of being embroiled in wars in the Middle East and Ukraine.
China may also hope to capitalise on Trump’s actions relating to US allies such as Canada and Mexico, which have also been hit by tariffs, and will not want to ramp up the rhetoric too far to scare off potential new global partners.
