TRADE WARS, TARIFFS, AND SHRINKING GLOBAL ECONOMY

SAMUEL AKPOBOME OROVWUJE argues for the

deepening of intra-African trade under AfCFTA to strengthen local value chains

In today’s world, trade is not just about economics—it’s about politics, power, and national interest. Countries are increasingly looking inward, raising tariffs, redrawing trade agreements, and protecting their own industries. In the midst of this, a fundamental question arises: whatever happened to the idea that nations should simply trade what they are best at producing?

Interestingly, the Heckscher-Ohlin theory— is an age-old economic model—sought to explain global trade through the lens of specialization, comparative advantage and factor endowment. According to the theory, nations naturally export goods that rely on their abundant resources—land, labour, or capital—and import what they lack. In theory, it’s a win-win situation: each country specializes, trade flows efficiently, and prosperity spreads. But the reality in today’s polarized world is far from that.

Fundamentally, a labour-rich country like Vietnam should export textiles. A capital-heavy economy like Germany should focus on automobiles and high-tech machinery. This balance was once the foundation of global trade. But now, with powerful countries slapping tariffs on imports to protect domestic jobs or score political points, the system is breaking down.

Consider how U.S. President Donald Trump turning tariffs into weapons of economic warfare, targeting Chinese goods and even penalizing allies. The result? A global trade environment full of uncertainty. In Nigeria and across the African continent, this shift has real consequences—especially for economies trying to grow beyond raw material exports.

Curiously, take steel production in a developing country: it is often cheaper to import steel than make it locally. But to protect jobs and build capacity, governments impose tariffs on imports. In the short run, that seems like a good move. But in the long run, it can raise costs across the economy, hurt consumers, and slow industrial development.

The deeper issue is this: the Heckscher-Ohlin theory assumes a fair and level global playing field. But the real world doesn’t work that way. Powerful economies—like the United States and parts of Europe—often impose higher tariffs on processed goods from poorer countries. So, while Nigeria can export cocoa beans without much trouble, exporting chocolate triggers trade barriers. This traps many African countries in a cycle of exporting raw materials instead of moving up the value chain.

The irony is that Tariffs hardly ever hurt the powerful nations that impose them. It’s the developing economies that bear the brunt. Instead of promoting trade justice, current rules often preserve economic imbalances that favour the Global North.

What is more, the promise of factor price equalization—the idea that trade would eventually balance wages and returns across countries—remains unfulfilled. Global inequality is rising. African, Asian, and Latin American nations still struggle to industrialize, while the wealthier nations benefit from high-tech exports and preferential trade deals.

The Trump’s Tariff Trap has become Africa’s burden particularly from the perspectives of targeting the very products that African countries most needed to export to move up the industrial value chain. While raw materials like cocoa, coffee, or crude oil face little to no restrictions, attempts to export finished or processed products—chocolate, roasted coffee, refined petroleum—are met with steep tariffs, non-tariff barriers, technology transfer, and higher revenues associated with value-added production.

Africa, so where do we go from here? We need to rethink trade not just as an economic equation, but as a tool for justice and shared prosperity. The Heckscher-Ohlin theory still holds some value—it reminds us that trade can benefit all, if it is fair. But it must evolve to meet today’s Africa realities: climate change, digital economies, and widening inequality.

For Nigeria and other African countries, the path forward must involve: restructuring tariff policies that penalize value-added goods from the Global South, investing in trade infrastructure and capacity, not just liberalization, and above all, deepening intra-African trade under the African Continental Free Trade Area (AfCFTA) to strengthen local value chains.

Intra-African trade also suffers from tariffs imposed by African governments themselves. Despite the promise of the AfCFTA, many member states still maintain protectionist policies that stifle trade between neighbouring countries. These tariffs—often driven by revenue needs or political pressure—raise the cost of goods, discourage entrepreneurship, and limit the continent’s ability to build resilient supply chains.

Furthermore, restrictive rules of origin and trade facilitation remains weak due to poor infrastructure and customs inefficiencies. The WTO Doha Round and Cancun talks exposed breaches in trade justice, as developed nation’s resisted reforms on subsidies and market access, undermining Africa’s fair integration into global trade.

The deeper issue is that the Heckscher-Ohlin theory assumes a fair and level global playing field. But the real world does not work that way. Trade today is shaped by unequal existential power dynamics. Powerful economies—like the United States under Trumps administration and parts of Europe—often impose higher tariffs on processed goods from poorer countries, while aggressively protecting their own industries through subsidies and non-tariff barriers.

On the other hand, The African Growth and Opportunity Act (AGOA), enacted in 2000, provides eligible sub-Saharan African countries duty-free access to U.S. markets for over 6,000 products faces uncertainty due to periodic renewals and limited product coverage. Therefore, Trump’s rhetoric on “America First” and threats to cut trade preferences would strain U.S.-Africa trade diplomacy, highlighting vulnerability, conditionality, and the need for more balanced, long-term trade frameworks remain to be seen.

For everyday Nigerians and other Africans, this translates into higher prices for basic goods, limited access to quality products, and fewer employment opportunities in manufacturing and agribusiness. Instead of building competitive industries, many nations remain stuck in a cycle of import dependency and external vulnerability.

In a world rocked by inflation, supply chain crises, and growing nationalism, trade needs a new narrative. One that moves beyond textbook models to practical, people-centered solutions. Tariffs must protect the future—not the past. And global trade must be reimagined not just for profit, but for people.

Orovwuje is an international development consultant based in Lagos, Nigeria. He specializes in human rights, migration, conflict analysis, and policy advocacy, and writes frequently on socio- economic justice and South-South cooperation.