Tinubu Administration Reduces Import Duties On Key Goods Amid Inflation

In a major policy shift aimed at easing Nigeria’s worsening cost-of-living crisis, the Federal Government has started implementing wide-ranging cuts in import duties on essential goods, including food staples, passenger vehicles, mass transit buses, electric vehicles and manufacturing machinery.

The new rates, which took effect this July, were reported to be contained in the 2026 Fiscal Policy Measures approved by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.

The policy is seen as one of the most significant overhauls of Nigeria’s tariff regime in recent years, with 127 tariff lines targeted with reduced rates across household consumption, transport, manufacturing and industrial activity.

The government’s move comes at a critical period for the economy, as many Nigerians continue to battle high food prices, transport costs and weak purchasing power. Although inflation had come down from its peak of about 33 per cent at the end of 2024, there have been concerns about renewed price pressures.

S&P Global recently increased its 2026 inflation forecast for Nigeria to 16.9 per cent, citing global energy shocks that were putting pressure and had helped to fuel a sharp rise in petrol prices.

Rice, Sugar, Palm Oil Duty Reduced
A key part of the new fiscal measures is targeted at food items commonly consumed by Nigerian households.

The revised rates cut duty on bulk rice from 70 per cent to 47.5 per cent and broken rice now carries a 30 per cent duty.

Raw cane sugar duties have been compressed to between 55 per cent and 57.5 per cent, and crude palm oil now attracts 28.75 per cent duty, down from 35 per cent.

The cuts are meant to lower the price of staple foods and cut costs for commercial food producers.

Rice is still a staple food in many homes and the cut in duty is likely to ease the pressure, if the gains are passed on to consumers.

But analysts cautioned that lower duties alone might not necessarily mean cheaper food, particularly with ongoing exchange rate pressures, high fuel prices, logistics costs and port charges.

Relief for Cars, EVs, Buses
The new tariff regime also places a major focus on the transport sector.

Duty on passenger vehicles has been slashed from 70 per cent to 40 per cent, a move that is expected to reduce the landed cost of imported cars.

The government also completely exempted mass transit buses and electric vehicles from import duties, in a bid to bring down transport costs and promote the use of cleaner energy.

Machinery for manufacturing now draws zero per cent duty in a move to revive industry, lower production costs and encourage investment in local manufacturing.

The policy could help transport operators who rely on imported buses, trucks, minibuses and light commercial vehicles for interstate haulage and urban transport services, stakeholders said.

Many operators operate ageing fleets that are expensive to maintain, fuel inefficient and prone to frequent breakdowns. High cost of replacing vehicles has been blamed for the high number of unserviceable vehicles on Nigerian roads.

With the reduction in import levies, industry players expect a gradual decline in the landed cost of vehicles which could allow transport companies and independent operators to renew their fleets at a lower cost.

Possible Effect On Food Prices
The policy may also benefit the logistics sector, especially where trucks are used to move agricultural produce across long distances, it was understands.

Transport costs contribute a substantial amount to the prices of food in Nigerian markets, especially for staple crops like sorghum, millet, maize, yam and cassava, which are brought from rural production centres in the North to urban markets in the South.

Stakeholders feel that any savings in haulage costs could eventually feed into final retail prices of food items.

But the impact is likely to be more of a drip than a bang.

Lower vehicle acquisition costs could also improve efficiency in the transport sector by allowing operators to invest in more fuel efficient and reliable vehicles, reduce breakdowns and, improve delivery turnaround time.

But these potential gains could be offset by other structural pressures in the economy.

Crude oil prices have dropped below $73 in the international market but fuel prices remain above ₦1,000 per litre. The exchange rate is still hovering between ₦1,400 and ₦1,500 to the dollar.

While these factors mean the reduction in import levies may slow the pace of transport cost increases, they may not immediately reduce fares or food prices.

Public commentator Kehinde Aluko told the Guardian the policy raised questions about consistency in government economic management.

“For years, the Federal Government encouraged local production, especially in agriculture, by using high tariffs to protect Nigerian farmers from cheaper imports,” he said.

Aluko cautioned that the sudden reduction of tariffs on rice and other commodities could erode investor confidence and damage local farmers who had made investment decisions based on protectionist policies.

The government is not simply reducing revenue but moving the tax burden from imports to consumption, he said.

“The government’s strategy is not merely about reducing revenues, it is about a fundamental shift in the tax burden from imports to consumption. We will also be introducing new excise duties on non-alcoholic beverages, alcoholic drinks and tobacco products from July 1, 2026, and a “green tax” surcharge on higher-engine vehicles.

“This means relief from lower import duties might be offset by higher prices for everyday consumables and luxury items. For the average Nigerian, the immediate future is a kind of tug of war. On the one hand, it may become cheaper to purchase a car or industrial machinery, but the daily cost of a bottle of soda or a pack of cigarettes will almost certainly increase,” he said.

Aluko, also a telecom expert, said the real test of the policy would be in whether relief at the ports would outweigh new costs at the checkout counter.

“The next few months will be a critical test for the economy and the resilience of the Nigerian people as the government changes focus,” he said.

Importers fear congestion
Importers, freight forwarders and car dealers said tariff reduction alone may not bring the desired economic outcome.

They identified the volatility of the exchange rate, multiple port charges, logistics costs, terminal handling fees and delays in cargo clearance as major determinants of the final cost of imported goods.

According to them, in the absence of addressing these bottlenecks and tariff cuts, the benefits will not be fully felt by businesses or ordinary Nigerians.

They pointed out that tariff adjustments were also introduced on selected products during the administration of former President Muhammadu Buhari to support local production and address economic realities.

The tariff on imported vehicles was lowered from 35 per cent to 10 per cent in 2021.

But stakeholders said the measure had mixed results. Although some importers benefited from lower duties on some items, the gains were largely eroded by foreign exchange volatility, rising shipping costs, inflation and port-related charges.

Therefore the expected decrease in consumer prices was not fully realised.

Inspired Cars’ Manager of Client Services, Iwayeye Olatunji, said the reduction in import duty on vehicles and spare parts was a welcome development but may not translate into significant reductions in the prices of vehicles.

He said the new policy could be blunted by high exchange rates and other import-related charges.

Previous reductions in duty under the Buhari administration had little impact on the prices of vehicles, Olatunji said, noting that only about 10 per cent difference was recorded.

Though the new cut looks good on paper, consumers may not see much price relief because several other costs associated with vehicle importation remain unchanged, according to him.

“Honestly, it was mostly paper before. Okay, the duty was reduced, but did it really make any direct difference to the market? That is a different problem. “If the duty is cut, but there are other supporting fees, the total price does not really change,” he said.

The National President of the Africa Association of Professional Freight Forwarders and Logistics of Nigeria, Frank Ogunojemite, said the value of the policy would not be measured by the announcement but by its practical effect.

He said the key measures would be impact on the cost of doing business, prices of imported goods and the overall cost of living.

“The difference is today that tariff reduction alone cannot bring the desired economic result. Volatility of exchange rates, multiple port charges, logistics costs, terminal handling charges and delays in cargo clearance are still the key determinants of the final cost of imported goods. “However, the benefits of tariff reductions may not be fully felt by businesses or ordinary Nigerians unless these bottlenecks are simultaneously addressed,” he added.

Ogunojemite urged the Federal Government to closely monitor the market response to ensure that the intended benefits reach the consumers and are not eroded by inefficiencies in the supply chain.

“Nigerians want to see benefits beyond policy papers. “Lower tariffs should ultimately mean lower landing costs, more import activity, better business confidence and cheaper products for consumers,” he said.

Importer sees policy disconnect.
Clinton Ikechukwu Okoro, an importer and Chief Executive Officer of Globe Joy Investment Nigeria Limited, confirmed that the new duty rates had begun at the ports.

He, however, argued that the process revealed a disconnect between policymakers and operators in the automotive import sector.

Okoro said that the earlier reduction in vehicle duties under the Buhari administration did not lead to a significant drop in the prices of vehicles or a boost in imports.

Vehicle prices have continued to rise sharply, making car ownership increasingly difficult for many Nigerians, he said.

He said that despite earlier duty cuts, imports of used vehicles have fallen sharply over the last few years.

Okoro was cautiously optimistic that the latest policy could encourage vehicle imports if the reductions prove meaningful after a detailed review.

Mixed reactions emerged from the automotive sector stakeholders on the new tariff regime, especially on vehicle imports.

Some warned the policy could undermine local vehicle manufacturing, but others said it would improve affordability and increase vehicle availability in the market.

The Managing Partner of Transtech Industrial Consulting, Luqman Mamudu, said the tariff differential on passenger vehicles was not enough to offer meaningful protection to local manufacturers.

Even if the effective tariff protection is about 70 per cent, the 40 per cent differential on passenger cars is not enough to induce serious investment in vehicle manufacturing, he said.

Mamudu said that Nigeria’s automotive industry still needed deliberate protection by the government within the limits allowed under the Economic Community of West African States Common External Tariff.

“Deliberate protection is required for the industry including full utilisation of the Import Adjustment Tax (IAT) window and applicable levies. Those measures can then be phased out gradually as the industry matures,” he said.

He said many foreign vehicle makers enjoy huge government subsidies in their countries, making it hard for Nigerian assemblers to compete solely on tariff protection.

He advised the Federal Government to back up tariff measures with in-country concessions and incentives aimed at encouraging global automakers to set up production facilities in Nigeria.

“The auto industry has a multiplier effect on the overall economic development. So, too much is no support by government,” Mamudu added.

‘Zero Tax On Commercial Vehicles’ Attacked
Mamudu also criticised the Federal Government’s decision to impose zero per cent import tariff on commercial vehicles, saying it is too much and could be detrimental to Nigeria’s emerging commercial vehicle assembly industry.

He said the policy would not lower car prices much or help local production.

Commercial vehicle assembly was one of the success stories of the National Automotive Industry Development Plan, with local manufacturers making progress in increasing local content, he said.

“Commercial vehicle plants are easier to set up and increase local content. “The automotive body building is one area where Nigeria has built a substantial local capacity over the years,” he said.

Mamudu recalled that prior to the 2020 Finance Act, local assemblers only imported engines and carb assemblies as complete components, while companies like Transit Support and Dangote Industries had begun investing in facilities to produce more components locally.

He said the reduction of import tariffs on commercial vehicles from 35 per cent to 10 per cent in 2020, which was equal to the tariff on fully built imported vehicles, led to the collapse of many assembly plants.

“Almost every commercial vehicle assembly plant was closed down. “Many companies now depend on imports, while only a few still import semi-knocked down kits mainly for logistics advantages and to keep their equipment running,” he said.

He warned that now that tariffs have been reduced to zero, remaining operators may be forced to abandon their assembly facilities altogether.

However, the National President, Association of Motor Dealers of Nigeria, Prince Ajibola Adedoyin, hailed the tariff review, describing it as an improvement.

The lower tariffs would increase the availability of vehicles in the Nigerian market and make vehicles more affordable to consumers, Adedoyin said.

“It is an upgrade. “It will make things more accessible and prices cheaper,” he said.

The differing views reflect the difficult balancing act facing the Federal Government in trying to reduce prices for consumers, ease business costs and protect local production.

For ordinary Nigerians, the next few months will reveal whether the tariff reductions will lead to cheaper food, lower transport costs and more affordable vehicles, or whether pressure on the exchange rate, port charges and inflation will eat up the expected gains.