U.S. tariffs hike adds to Turkey's economic problems

13 August, 2018, 06:30 | Author: Eric Barnett
  • President Donald Trump

Turkey has drafted an action plan and its institutions will start taking necessary steps on Monday morning to ease financial markets' concerns, Finance Minister Berat Albayrak said, after the lira plunged last week.

Turkey's row with the United States has further weighed on the lira.

Washington in response sanctioned two Turkish ministers, and Mr. Trump on Friday announced the United States was doubling tariffs on steel and aluminum imports from Turkey, saying relations with Ankara were "not good at this time". "Aluminum will now be 20% and Steel 50%", President Donald Trump tweeted".

His chief advisor and spokesperson Ibrahim Kalin pointed out more blatantly that the United States might lose Turkey for good.

"It is wrong to dare bring Turkey to its knees through threats over a pastor", Erdogan said in the Black Sea town of Unye.

The US imposed tariffs of 25 per cent on steel and 10 per cent on aluminum in March for imports from a variety of countries.

Analysts say that while Washington's sanctions against Ankara sparked the immediate crisis, Turkey's economy has been risking trouble for a while due to high inflation and the weak lira.

The White House said Mr Trump had authorised them under a section of USA trade law that allows for tariffs on national security grounds.

On the brink of a full-blown currency crisis, Turkey's lira plunged to a record low on Friday, tumbling as much as 18 percent in its biggest daily drop since 2001.

"If you have dollars, euros or gold under your pillow, go to banks to exchange them for the Turkish lira".


Reverberations spread through global financial markets, with European stock markets especially hit as investors took fright over banks' exposure to Turkey.

Iran has also suffered a major tumbling of its currency this year partly over the reimposition of USA sanctions after Trump abandoned the 2015 nuclear deal.

The lira has always been falling on worries about Mr Erdogan's influence over monetary policy and worsening relations with the United States.

Ankara wants the United States to extradite Fethullah Gulen, a Pennsylvania-based cleric who Turkish authorities say masterminded the 2016 coup attempt in which 250 people were killed. Gulen denies the allegation.

Turkey and the US are now experiencing rocky relations following Washington's imposition of sanctions on Interior Minister Suleyman Soylu and Justice Minister Abdulhamit Gul for not releasing American Pastor Andrew Brunson, who faces terrorism charges in Turkey. He has denied the charges.

Tensions have been mounting between the two North Atlantic Treaty Organisation allies over Ankara's detention of several Americans and other diplomatic issues.

His cause resonates with Trump's Christian conservative supporters, who could be influential as Republicans seek to retain control of Congress in midterm elections in November.

U.S. President Donald Trump introduced a round of sanctions on August 1, preventing the Turkish justice an interior ministries from doing business with U.S. businesses.

On Saturday, Turkish president Recep Tayyip Erdogan warned the USA that it could lose a "strategic partner", declaring a rally: "We only bow before God".

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