Trump doubles steel and aluminum tariffs on Turkey to 20 and 50%

10 August, 2018, 20:11 | Author: Regina Silva
  • Trump doubles steel and aluminum tariffs on Turkey to 20 and 50%

Turkey's unfolding economic crisis has deepened further after Donald Trump announced a doubling of United States import tariffs on Turkish steel and aluminium, deepening the country's currency freefall and rattling financial markets.

Turkey's embattled lira on Friday hit new record lows against the U.S. dollar and euro, losing over seven percent in value as strains with the United States showed no sign of abating and fears grew over the exposure of European banks.

Andrew Brunson has been in Turkish custody since 2016, when he was arrested on charges of terrorism and support of a group held responsible for an attempted coup of Turkish President Recep Tayyip Erdogan.

The United States is the world's biggest steel importer.

Trump imposed tariffs of 25 percent and 10 percent on imported steel and aluminum respectively earlier this year. But those talks on Thursday showed no signs of breakthrough. The worry is that Turkey will face further sanctions if he is not released.

President Tayyip Erdogan told Turks on Friday to exchange their gold and dollars into lira, with the country's currency in free fall after President Donald Trump turned the screws on Ankara by doubling tariffs on metals imports.

"Various campaigns are underway against Turkey, pay no attention to them".

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.

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.

"However, I say it once again from here".

On Friday, before Trump's tweet, Erdogan had tried to stem the sell-off by appealing to Turkish citizens to exchange any dollars, euros or gold for lira to help the currency. "This is a national, domestic battle", he said.

Erdogan appeared to blame foreigners for trying to hurt Turkey, "This will be my people's response against those waging an economic war against us", he said.

The White House also cited currency movements in China last week when Trump called for a possible increase in tariff rates on Chinese imports.

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In fact, TRY once again drops below the 6.0 mark after Erdogan said the country faces a wave of artificial financial instability. The currency has lost more than 30% of its value so far this year.


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The Turkish lira hit a record low of 6.24 per dollar on Friday, before recovering to 5.92 _ still down a whopping 7 per cent on the day.

The Lira has plunged 66% since the start of the year, pushing up the cost of goods for Turkish people and shaking worldwide investors' confidence in the country.

Turkey, home to the Incirlik air base which is used by US forces in the Middle East, has been a North Atlantic Treaty Organisation member since the 1950s and a close ally of the United States.

The recent plunge comes after a Turkish delegation in Washington failed to stop the USA from imposing sanctions against two senior ministers.

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.

They are also concerned over the central bank's ability to rein in persistent double-digit inflation with the president repeatedly calling for lower rates.

"There is zero credibility in the Central Bank of Turkey and zero credibility in Turkish policy making".

Erdogan is preaching calm as his country's currency collapses.

'If they have their dollar, we have the people, we have Allah, ' he 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.

Pressure has been applied on the country in recent days to stage an emergency interest rate rise to avert further economic damage.

The reaction from global currency markets to the rift between two North Atlantic Treaty Organisation allies caused the euro to slump to a 13-month low and pushed the dollar to a one-year high.

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