Nigeria faces a potential economic crisis due to the current tariff war between the United States and China which has led to a drop in the price of crude oil globally. Prices hit its lowest levels in four years after it fell for a fourth consecutive trading day on Tuesday. US President Donald Trump is set to effect a 104% import duties tariff on China, which is currently the world’s largest oil importer.

Ye Lin, vice president of oil commodity markets at Rystad Energy, speaking on the development, said, “China’s aggressive retaliation diminishes the chances of a quick deal between the world’s two biggest economies, triggering mounting fears of economic recession across the globe.”

Since Trump’s announcement of the new tariffs, oil has lost almost one-fifth of its value. Brent crude futures have dropped more than 19% to $60.41 per barrel, while West Texas Intermediate (WTI) futures plunged 20% to $57.06 per barrel—both marking their lowest levels since March 2021.

Nigeria’s economy is hugely dependent on proceeds from crude oil. The oil sector provides 95% of Nigeria’s foreign exchange earnings and 80% of its budgetary revenues. Nigeria pegged brent crude at $75 per barrel in its 2025 budget, which currently trades at $60. This huge shortfall has significant impact on the nation as it creates a wider budget deficit, negatively impacts the foreign exchange market and could lead to increased borrowing. The 2025 budget already has a 13 trillion naira deficit that government says would be funded by borrowing. With the fall in oil prices, this figure may increase, leading to further economic woes.