Trump authorizes doubling of steel, aluminum tariffs on Turkey

Brussels

Lira crashes as US slaps tariffs on Turkey

Lecturer at the Frederick S. Pardee School of Global Studies at Boston University, was recently interviewed on the state of relations between the United States and Turkey after U.S. President Donald Trump announced the doubling of steel and aluminum tariffs on Turkey.

With the currency diving, Trump authorized higher tariffs on Turkish imports on aluminum and steel of 20% and 50% respectively.

Turkey's lira plunged as much as 14 percent on Friday as worries about President Tayyip Erdogan's influence over monetary policy and worsening USA relations snowballed into a market panic that also hit shares of European banks.

Trump's latest tariff decision reflects increased tensions between the two countries, which intensified in late July after the USA demanded freedom for Pastor Andrew Brunson, a United States citizen detained in Turkey, the report said.

Trump's decision to double tariffs on Turkey is another salvo in the growing dispute between the two North Atlantic Treaty Organisation allies.

Ruhsar Pekcan said in a statement the move would not only have an impact on Turkey but affect US companies as well.

"We implore President Trump to return to the negotiating table - this can and should be resolved through dialogue and cooperation", he said in a statement.

Mr Trump said in a tweet that the tariff on aluminium imports will be increased to 20% and the tariff on steel imports will be raised to 50% as the Turkish lira "slides rapidly downward against our very strong Dollar!".

The two sides seemed to have failed to resolve the deadlock though bilateral talks in Washington earlier this week during the visit of a Turkish delegation headed by Deputy Foreign Minister Sedat Onal and made up of officials from Turkey's justice, finance and foreign ministries.

Separately, Pekcan's ministry said the tariffs were a violation of World Trade Organization rules and that it would defend Turkish producers' rights at the trade body and other worldwide platforms.

US State Department spokesperson Heather Nauert said on Thursday that although the two sides "had wide-ranging meetings at the State Department and with other departments here in Washington", the US side "would define progress as Pastor Brunson being brought home".

Istanbul Chamber of Industry on Friday called for urgent measures to cushion the potential damage of a free-falling lira on real sector, saying the fluctuation has turned into a source of financial instability. "Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies", Erdogan said.

New Finance Minister Berat Albayrak - Erdogan's son-in-law - acknowledged that the central bank's independence was critical for the economy, promising stronger budget discipline and a priority on structural reforms.

Erdogan, a self-described "enemy of interest rates", wants cheap credit from banks to fuel growth, but investors fear the economy is overheating and could be set for a hard landing.

But President Erdogan brushed off any concerns during a speech in the northeastern city of Bayburt on Friday, saying: 'The dollar can not block our path.

"If there is anyone who has dollars, euros or gold under their pillows, they should go exchange it for liras at our banks", he said Friday. This will be my people's response to those who have waged an economic war against us'.

Albayrak was speaking at a conference where he outlined his ministry's "new economic policy" as the currency plunged, raising questions about the country's financial stability.

The euro sagged to a 13-month low against the dollar amid worries about the impact of financial market turmoil in Turkey. Hard currency debt issued by Turkish banks suffered similar falls. "Don't heed them. Don't forget, if they have their dollars, we have our people, our God", Erdogan said.

Latest News