U.S. to double Turkey tariffs amid decline in relations

Ann Santiago
August 14, 2018

President Donald Trump said Friday that he would double the rate of tariffs on imported steel and aluminum from Turkey and cited the rapid depreciation of the Turkish lira in the face of a deepening economic crisis for President Recep Tayyip Erdogan.

Turkey and the USA 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.

Meanwhile, concerns of the US-Turkey spat went beyond Turkey's borders as Financial Times reported that the European Central Bank (ECB) has become concerned about the exposure of some of the currency area's biggest lenders to Turkey in light of Turkish lira's dramatic fall.

In March, the U.S. had imposed tariffs of 25 per cent on steel and 10 per cent on aluminum for imports from a variety of countries.

The White house said he had authorised the move under Section 232 of US trade law, which allows for tariffs on national security grounds.

"The announcement today of the tariffs on steel and aluminum in Turkey continues to further escalate a growing diplomatic crisis between Turkey and the United States.

The lira TRYTOM=D3 has always been falling on worries about Erdogan's influence over monetary policy and worsening relations with the United States. The Turkish lira has lost more than 40 percent of its value against the USA dollar this year. Overall, the national currency lost roughly about 40 percent of its value this year. A delegation of Turkish officials held talks with their counterparts in Washington this week but there is no sign of a breakthrough. The decision marked a departure for the USA, which has generally tried to calm global markets during times of financial turmoil in emerging markets, especially when investors are gripped by fear of contagion.

Turkey's trade minister Ruhsar Pekcan on Friday urged the US President to return to the negotiating table on tariffs, saying the trade rift between the North Atlantic Treaty Organisation allies can and should be resolved through dialogue.

Erdogan urged Turks to combat the lira's slide by selling any dollars they have stashed away - advice few Turks are likely to take since hard currency is their best insurance against soaring prices.

"Nevertheless, we implore President Trump to return to the negotiating table - this can and should be resolved through dialogue and cooperation", he added.

"This is a national, domestic battle". "This will be my people's response to those who have waged an economic war against us".

Washington has demanded the pastor's release and last month imposed financial sanctions on two Turkish ministers.

Albayrak gave a presentation to business leaders in Istanbul promising structural reform, economic re-balancing, and "sustainable and healthy growth".

Turkish President Tayyip Erdogan makes a speech during a meeting of his ruling AK Party in Ankara, Turkey August 4, 2018. His comments on interest rates - and his recent appointment of his son-in-law as finance minister - have heightened perceptions that the central bank is not independent.

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