There is a worldwide threat of global economic recession that looms on the horizon, as businesses and financial markets react to impending tariffs to be instituted by U.S. President Donald Trump. The sweeping import tariffs, to come into effect on Wednesday referred to as “Liberation Day” by Trump have sent markets into chaos all over the globe.
U.S. equities markets registered another decline, with Japan’s Nikkei index falling over 4% and London’s FTSE 100 shedding around 1% in early trade. The uncertainty is sparked by Trump’s declaration of imposing tariffs on all trading partners, not just those with significant trade deficits with America.
The United Kingdom has stated that it expects to be affected and stands prepared for retaliation. The new tariffs will join existing tariffs on aluminium, steel, and cars, as well as increased tariffs on Chinese imports. The impact has driven gold prices to record levels and fueled worries of a global trade war.
Market Fear and Economic Consequences
Market analysts are increasingly worried about the potential impact. Forvis Mazars chief economist George Lagarias warned, “Inconsistency breeds uncertainty, and markets hate uncertainty.” Similarly, Barclays rates head Ajay Rajadhyaksha accepted, “A recession is now a realistic risk across major economies.”
Goldman Sachs raised its probability of an American recession to 35%, up from 20%, as the firm anticipates Trump to impose across-the-board tariffs averaging 15% on April 2.
The cryptocurrency market hasn’t been spared. In the aftermath of trade war tensions, leveraged positions have rolled over, setting off a steep decline. According to a Cointelegraph report, on March 27, the total market capitalization of digital assets declined by 0.91% to $2.77 trillion, from an all-time high of $2.86 trillion.
Bitcoin (BTC) saw $62.45 million in 24-hour liquidations, and Ethereum (ETH) experienced over $43 million in long liquidations. Experts say that there are still risks to the downside as technical indicators suggest a bearish reversal.
Nigeria and Africa: Risks and Opportunities
African economies like Nigeria are bracing for the potential spillover effects of the escalating trade war. Nigerian economy was told by InvestData Consulting’s COO, Ambrose Omordion, to diversify to reduce reliance on oil exports.
Dr. Muda Yusuf, director of Centre for the Promotion of Private Enterprise (CPPE), noted that economic nationalism on the part of the Trump administration could redefine the dynamics of global trade. Dr. Chinyere Almona, director-general, Lagos Chamber of Commerce and Industry (LCCI), concurred that while trade disruptions could open fresh windows of opportunity, Nigeria had to position itself strategically in order to benefit.
Sola Obadimu, National Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) director-general, urged the need for a trade policy that protects the economic interests of Nigeria.
Meanwhile, Futureview Group added that even though commodity-exporting economies like Nigeria tend to be prone to falling oil prices and slowing foreign investment, they can likewise exploit the ability to raise exportation to the U.S. and other nations.
As global markets go topsy-turvy, Nigeria’s response to the shifting trade paradigm will determine all the difference for it between risk mitigation and taking advantage of new opportunities in an increasingly fragmented global marketplace.
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Olawale Moses Oyewole is an adept writer who stays on top of current events and curate informative and engaging articles for his readers. He is a digital strategist who help brands gain online visibility.
