BAT-TRUMPNOMICS

Introduction

The global economy is again at an inflection point, shaped by shifting geopolitical alliances, the resurgence of economic nationalism, and volatile commodity markets. Against this backdrop, Nigeria’s economic policy under President Bola Ahmed Tinubu (BAT) must contend with a world where former U.S. President Donald Trump has returned to the White House, doubling down on his economic ideology. This dynamic—what I term “BAT-TRUMPNOMICS”—represents Tinubu’s strategic manoeuvring within a global financial landscape that remains influenced by Trump-era economic doctrines of trade protectionism, energy dominance, and a strong dollar policy. Nowhere is this interplay more evident than in the oil market, a key driver of Nigeria’s economy.

The Trump Effect on Global Markets

Trump’s economic philosophy has always been built on three pillars: deregulation, tax cuts, and a hardline stance on trade. His return to power has reignited these policies, with an even stronger focus on ramping up U.S. oil production. True to form, Trump is also throwing tariffs around and wielding his presidential powers like he’s swinging golf balls at Mar-a-Lago. This push for American energy independence is already disrupting global oil markets, putting downward pressure on prices and reshaping supply chains (IEA, 2024). For Nigeria, a nation whose fiscal stability is deeply tied to oil revenue, this shift demands recalibration.

Oil Markets and the Nigerian Conundrum

Trump’s return to the White House has brought an aggressive expansion of U.S. crude production, driving down global oil prices (Financial Times, 2024). Tinubu, on the other hand, is targeting an oil price of $75 per barrel—a level he considers optimal for Nigeria’s fiscal health. However, with Trump’s pro-fossil fuel policies flooding the market with American crude, achieving this price target becomes increasingly difficult.

The $60 Per Barrel Risk

Nigeria faces a severe economic crunch if oil prices drop below $60 per barrel. Such a scenario would exacerbate budget deficits, weaken government revenue streams, and strain foreign exchange reserves. The naira, already under pressure, would likely face further depreciation, increasing inflation. Tinubu’s administration would be forced to explore aggressive fiscal interventions, including increased borrowing or deeper subsidy cuts to manage the fallout.

For Nigeria, an OPEC member heavily reliant on crude exports, such a shift presents a dual challenge: competing with cheaper U.S. crude in global markets while managing a currency that has struggled under depreciation pressures. Tinubu’s government must navigate this landscape by strengthening domestic refining capacity, securing strategic oil partnerships, and ensuring fiscal policies that hedge against external shocks. The Dangote Refinery—a $19 billion project with the potential to transform Nigeria’s downstream oil sector—could be a game changer if operational efficiency is optimized (CNBC Africa, 2024).

The OPEC Factor: Will Oil Prices Be Allowed to Fall Below $60?

Historically, OPEC has played a pivotal role in stabilizing oil prices by adjusting production quotas among member countries. While Trump’s pro-oil policies may increase global supply, OPEC—led by Saudi Arabia—has a vested interest in preventing prices from plunging below economically sustainable levels. In the past, OPEC has intervened when prices dropped too low, such as during the COVID-19 pandemic when a historic production cut was implemented to rebalance the market (Reuters, 2020).

However, maintaining production cuts in the face of surging U.S. oil supply presents a challenge. Some OPEC members, particularly those with fragile economies, may struggle to adhere to quotas, leading to internal friction within the cartel. Nigeria, as a key OPEC player, must advocate for sustained price controls while balancing its own production needs. If oil prices breach the $60 threshold, it is likely that OPEC will step in with coordinated cuts to stabilize the market—though the effectiveness of such measures will depend on broader global demand trends and compliance within the organization.

Currency and Trade Policy: A Delicate Balancing Act

Trump’s dollar-strengthening policies inadvertently strain emerging market economies, including Nigeria. A strong U.S. dollar historically weakens emerging market currencies, making external debt servicing costlier (World Bank, 2024). Tinubu’s decision to float the naira was a bold move toward currency liberalization, but its execution has been painful, with inflation spiralling above 28% in early 2024.

As global markets adjust to Trump’s second presidency, Nigeria must adopt a proactive stance in foreign exchange policy. Strengthening foreign reserves, deepening non-oil exports, and fostering stronger trade partnerships within Africa—particularly under the African Continental Free Trade Area (AfCFTA)—will be crucial in mitigating currency volatility (IMF, 2024).

Conclusion: The Road Ahead

BAT-TRUMPNOMICS encapsulates Tinubu’s challenge of executing economic reforms in a global market increasingly shaped by Trump’s policies. While there are parallels in their approaches—economic liberalization, deregulation, and prioritization of domestic economic interests—their realities diverge significantly. Trump operates from a position of economic strength, while Tinubu is navigating an economy in recovery.

If oil prices remain stable, Nigeria can cautiously implement its economic reforms. However, if they fall below $60, the country could face severe economic headwinds, forcing Tinubu’s administration to make difficult fiscal choices. The path forward will require strategic diplomacy, robust fiscal policies, and market-friendly reforms that position Nigeria as a resilient player in the evolving global economy. The question remains: Can Tinubu successfully align Nigeria’s economic trajectory with shifting global trends, or will external shocks dictate the country’s economic fate? The coming years will provide the answer.