Published: Sat, August 11, 2018
Business | By Kate Woods

Trump doubles metal tariffs on Turkey as lira falls by 20%

Trump doubles metal tariffs on Turkey as lira falls by 20%

The US responded by imposing sanctions on Turkey and threatening more.

The lira dropped by over 11 percent in value in one day on Friday morning to almost six lira per dollar.

Trump said the tariffs on aluminum imports would be increased to 20 per cent and those on steel to 50 per cent as the Turkish Lira "slides rapidly downward against our very strong Dollar!" Lindsay Graham of SC, said Trump's decision was retaliation against Turkey for not releasing Brunson. Speaking in the northeastern province of Gumushane, Erdogan said, "Apparently, those who believe they can force us to capitulate don't know [our] people at all".

President Trump has doubled USA tariffs on Turkish steel and aluminium, as the precipitous fall of the Turkish lira accelerates.

In a statement, the White House said the president had authorized the preparation of documents to raise tariffs, citing national security concerns.

With US sanctions and tariffs hitting Turkey this month for its refusal to release an American pastor, the relationship between the two North Atlantic Treaty Organisation allies is crumbling amid fears on the regional impact. The U.S. has chose to sanction a North Atlantic Treaty Organisation ally - absolutely remarkable. The lira fell further after Trump's tweet.

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But Aykan Erdemir, of the Foundation for Defense of Democracies, said Mr Trump's tariffs announcement comes "at the worst possible time for Mr Erdogan" and fits with USA strategy to increase pressure on Ankara until Mr Brunson is released.

The Turkish lira fell at least 13 percent Friday, as President Erdogan called for people to exchange their other forms of money to the lira. Turkish President Recep Tayyip Erdogan addressed supporters Friday in the provincial city of Bayburt.

"Some countries have engaged in behaviour that protects coup plotters and knows no laws or justice", he said.

He added: "Relations with countries who behave like this have reached a point beyond salvaging".

But analysts say that while there may be losses at banks, Turkey's economic problems do not pose a big threat to Europe or other big economies, like the United States. Gulen has denied the allegation.

"It's pretty remarkable how far the Trump administration is willing to go - putting at jeopardy the relationship with a North Atlantic Treaty Organisation ally over a preacher".

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Erdogan today called on Turks to support their struggling currency. "This crisis is created by America", said Serap, a 23-year-old clerk at a clothes store in central Istanbul.

By yesterday afternoon, the five-year credit-default swap, the cost of insurance against default on Turkey's government debt, had climbed to 500bps, up 40pc in the last two weeks and at levels not seen since the 2009 financial crisis. It is obvious how it will be done: "since the final decision-maker of all policies in the new regime is the president, the responsibility of regaining confidence is on his shoulders", said Seyfettin Gursel, a professor at Turkey's Bahcesehir University.

As the lira plunged as much as 18pc against the dollar to record lows, fears mounted over the exposure European banks have to Turkey's huge burden of dollar-denominated debt.

Treasury and Finance Minister Berat Albayrak has vowed to execute Turkey's new economic model together with "all national and worldwide stakeholders", while stressing that a "decisive" approach and the Central Bank's independence would be maintained.

This did nothing to revive the lira.

In response, President Trump tweeted in July, "The United States will impose large sanctions on Turkey for their longtime detainment of Pastor Andrew Brunson, a great Christian, family man and wonderful human being".

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