Traders brace as Trump’s auto tariff set to drive up used car prices in Nigeria

For most Nigerians, buying a brand new car remains out of reach. A used car, imported from America, has long been the next best option.

But that reality could be shifting. Africa’s largest used car market now faces fresh uncertainty as President Donald Trump's 25% tariff on cars and auto parts threaten to deliver another blow to a trade already battered by Nigeria’s currency woes and steep domestic import duties.

Trump's car import tariff, which took effect on April 3, applies both to new, foreign-made vehicles, and used cars, some of which are then re-exported to countries such as Nigeria.

About 60% of used cars shipped to Nigeria come from the United States, according to the U.S. International Trade Administration, meaning any increase in the cost of importing from the U.S. has a hefty impact on price tags.

Sunday Akibor has spent over 30 years building what he claims is the continent's largest used-car market - a community of 5,000 sellers displaying over 100,000 cars in Lagos. More than half arrive from America, he says, and the new tariff spells more trouble for a business already hurt by rising costs and Nigeria's weakening naira.

Nigeria, Africa's largest used vehicle importer, introduced 35% import duty and levy on used vehicles in 2022 to discourage imports and encourage local assembly.

The move sent car prices soaring as clearing costs jumped.

A Toyota Corolla that sold for seven million naira ($4,560) in 2023 now costs up to 15 million, Akibor said. Many dealers are struggling to sell.

"We have less customers, nobody is buying cars. We just come here and stay, nobody is buying, the cars are very expensive." Akibor says, adding that ‘’There is no other car that Nigerians will buy more than Tokunbo (local Yoruba term meaning ‘’returned from overseas’’). We don’t have factories where we manufacture new cars, even the government is supposed to give me an award for opening this type of market because this is the only way that Nigerians survive.’’

The ripple effects extend beyond car sales to Nigeria’s massive car spare parts market.

At the Ladipo International Auto Spare Parts Market - another African giant - where over 30 shipping containers of used car parts arrive daily, mostly from America, traders are bracing for impact.

Justice Ogbonnaya, chairman of one of the market's 40 units says this could push sellers to explore alternative markets, despite their reluctance.

‘’Most of us import from America, you know why? Their car is more sound than other countries, like Canada if you buy cars from Canada, because of the nature of their place…their water is salty, it is affecting the cars, mostly cars from Canada does not last.’’ He also added that ''[w]e will look for alternatives but if the worst comes to the worst, we will still go back to America and put that extra cost on our goods, but it will affect us and affect the people that are buying…all the countries that are patronizing us here, it will affect them,’’ he said, referring to clients from other parts of West Africa who come to Nigeria to buy car spare parts.

Quality drives demand, but geography also plays a role. Unlike cars from the United Kingdom or Japan, American vehicles come with left-hand steering, matching Nigeria's driving requirements.

‘’The love of U.S. has been in us to be buying cars there, so that is it, so it will be too hard for us to leave because if you are talking of Japan, Japan is not using normal hand (left side steering), when you bring it down here you have to change it to our own normal hand (left side steering) which will not work fine,’’ used car part trader, Onyebuchi Cosmos says.

U.S. vehicle exports to Nigeria had already fallen to $580 million in 2024 from $1.04 billion a year earlier, according to the Observatory of Economic Complexity (OEC) platform. This year, they are expected to sink 18%. The numbers tell the story of a relationship under strain.

Financial consultant Shuaibu Idris warns this could fundamentally reshape Nigeria’s automotive landscape and damage long-term bilateral trade relations.

''This tariff will certainly make the price of second hand vehicles being imported from the U.S. to be even more expensive and that could mean the United States of America’s ability to trade with Nigeria will be further reduced,’’ he said.

But he believes the disruption may be temporary.

‘’Chances are this may just last for the period that Donald Trump will be the president of America. I don’t see it last forever because over time countries will retaliate, countries will reciprocate, you know, the gesture of Donald Trump, and that will make you know the American product also to be a little less competitive than other products in other countries,’’

For Nigeria's auto industry, built almost entirely on imports, the tariffs represent another challenge.

With limited domestic manufacturing and strong consumer preference for American vehicles, the market faces difficult adjustments ahead.

As containers continue arriving at Lagos ports, and dealers assess their options, Nigeria's automotive sector prepares for what many expect will be a prolonged period of adjustment in a market where affordable transportation is already becoming a luxury few can afford.