Trump Doubles Tariffs On Steel, Aluminum From Turkey

Arturo Kim
August 13, 2018

The lira tumbled 16 percent against the dollar on Friday.

The ECB is concerned that the contagion will result in Turkish borrowers defaulting on foreign currency loans, which make up about 40 percent of the Turkish banking sector's assets, according to the Financial Times. Earlier it had fallen as much as 22 percent.

Turkey is also frustrated at USA unwillingness to extradite Turkish cleric Fetullah Gulen, who Erdogan accuses of staging a failed 2016 coup attempt.

President Trump said Friday the USA will double tariffs on steel and aluminum for Turkey, noting the relationship between the two states "are not good at this time!".

Turkish aluminum will now be taxed at 50% and steel at 20%, essentially pricing Turkish metals out of the USA markets.

The announcement accelerated the sell-off of Turkey's lira currency, already battered by worries about President Tayyip Erdogan's influence over the central bank.

Erdogan on Saturday repeated a call to Turks to help support the lira to win what he described was a "war of independence".

"The country is neither crumbling, nor being destroyed or bankrupt or in a crisis", he said, and added that the way out of the "currency plot" was to boost production and "minimise interest rates". He claims higher rates lead to higher inflation - the opposite of what standard economic theory says.

When the lira crashed, Iran threatened Mr Trump and said that the "entire world would unite" and use "force" the United States to scrap the sanctions.

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Trump made his unexpected announcement on Twitter from his golf club in Bedminster, New Jersey, as the Turkish currency, the lira, fell to all-time lows against the US dollar.

He is clearly angry that the United States has not taken more action against the Gulenist movement and what he said was a failure "to unequivocally condemn" the 2016 coup attempt.

Since then, its relationship with Turkey, the sixth-largest steel importer to the United States, has deteriorated, prompting Ankara to send a delegation this week to Washington to meet with both the State and Treasury Departments.

Brunson was moved from prison and placed under house arrest on July 25.

A statement from the Kremlin said the two leaders discussed economic and trade ties.

The United States hit two high-ranking Turkish officials with sanctions after the Turkish government refused to release imprisoned Christian pastor Andrew Brunson.

Erdogan promised supporters that Turkey was taking the necessary precautions to protect its economy but added "the most important thing is breaking the hands firing these weapons".

"It's very unfortunate that the Trump administration had to retaliate against Turkey for their continued refusal to release Pastor Brunson and other Americans being held in Turkish custody", Graham said. "China spat a well established one, but concerns over the European Union, Britain and Turkey also in the air", said Bart Wakabayashi, branch manager for State Street Bank and Trust in Tokyo.

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