Trump OKs stiffer tariffs on Turkish metals as lira plummets

11 August, 2018, 03:10 | Author: Eric Barnett
  • Turkey fails to resolve disputes with US

President Donald Trump announced Friday that he plans to double steel and aluminum tariffs on Turkey - prompting the lira to plunge 20 percent - amid heightened tensions between the two North Atlantic Treaty Organisation allies.

Compounding the lira's agony, President Donald Trump said he had doubled steel and aluminium tariffs on Turkey, noting that relations between the North Atlantic Treaty Organisation allies were "not very good".

Turkey exported $1.04 billion (€0.91 billion) worth of steel and $60 billion worth of aluminum to the USA in 2017, according to the Hurriyet newspaper.

US President Donald Trump has announced to double steel and aluminum tariffs on Turkey, saying relations between Washington and Ankara "not good" as tensions mount between the two countries.

Mr Trump has castigated Turkey for detaining American pastor Andrew Brunson, who is on trial for terrorism charges for allegedly associating with plotters of the failed 2016 coup against Mr Erdogan. Trump wrote. "Aluminum will now be 20% and Steel 50%".

"The surge in Turkish inflation, bond yields and the even more dramatic plunge in Turkey's exchange rate in 2018 suggest that the country could now be in danger of heading for a bust", Berenberg economist Carsten Hesse said.

The latest tariffs stem from the trade fight Trump launched earlier this year with several countries, including Turkey, according to the Washington Post.

On Friday, the euro sagged to a 13-month low against the dollar, down 0.7 per cent to $1.1450, after the Financial Times reported that the European Central Bank was anxious about possible losses at eurozone banks operating in Turkey.

He seems to see Turkey's collapsing currency not as an existential threat to their economy they are trying to forestall, but rather as something they actively want to try to make their exports more competitive.

'If there is anyone who has dollars or gold under their pillows, they should go exchange it for liras at our banks.


Turkish newspaper Hurriyet and other media reports quote Erdogan as making the comment to a group of worshippers following traditional Muslim Friday prayers during a visit to the northern city of Bayburt. This will be my people's response to those who have waged an economic war against us'.

Overnight it had retreated to its lowest since November 2016 on threats of new USA sanctions, weakening beyond the psychologically important 65-per-dollar threshold.

A plunge in the Turkish lira rocked global equities and emerging markets on Friday and fear of more turmoil sent investors scurrying for safety in assets like the yen and USA government bonds.

While Turkey and the United States are at odds over a host of issues, the most pressing disagreement has been over the detention of US citizens in Turkey, notably Christian pastor Andrew Brunson who is on trial on terrorism charges.

"Normally, Turkey might be able to shrug off this kind of story; however, right now the Turkish economy is already in the terminal stages of a descent into crisis".

"I would say we would define progress as Pastor Brunson being brought home", Nauert said.

The lira tumbled about 10 percent on Friday to another record low as investors anxious about Erdogan's unorthodox economic policies and US sanctions.

Turkey was facing artificial financial volatility, Erdogan said, and people should look to the "big picture" instead of foreign exchange prices.

Turkey's new economic perspective was unveiled on Friday by the state's top economic official, Treasury and Finance Minister Berat Albayrak.

In a statement, the White House said the president had authorized the preparation of documents to raise tariffs, citing national security concerns. The tech-heavy Nasdaq composite was down 83 points, or 1.1%, poised to end an eight-day winning streak. Hard currency debt issued by Turkish banks suffered similar falls.

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