Higher US tariffs increase pressure on Turkish economy

Lloyd Doyle
Августа 11, 2018

European and American bank stocks declined on concerns about their exposure to Turkey. Trump wrote. "Aluminum will now be 20% and Steel 50%".

Axios reported that the Turkey is trying to lessen their dependence on Russian Federation, and the increased sanctions will make their goal more challenging to reach.

So, to hike tariffs on Turkey, Trump needed a reason why maintaining America's domestic metal industry required imposing even steeper tariffs on Turkish exports than were already in place.

Turkey's iron, steel and aluminum exports to the USA were $1.1 billion in 2017 - 0.7 percent of the total exports.

Recep Tayyip Erdoğan tried to restore confidence in the Turkish lira after it plunged by more than 20% against the dollar on Friday.

He told supporters to "change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks".

Emerging market currencies are ending the week with a brutal sea of red across the board, with consistent losses throughout Asia, while the South African rand and Turkish lira are leading the way with losses within the EMEA.

Treasury and Finance Minister Berat Albayrak says Turkey will execute a new economic model with all market stakeholders and also carry out tight monetary and fiscal policy. The White House thought that Turkey had agreed to release the pastor in exchange for Israel's release of a Turkish woman that had allegedly given funding to Hamas. But the immediate trigger is North Carolina pastor Andrew Brunson, who has been detained in Turkey's Aegean province of Izmir since October 2016 on thinly supported espionage and terror charges.

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Ankara and Washington have been at loggerheads over the detention of Brunson on terrorism charges, earlier prompting USA sanctions against two of Erdogan's ministers and threats of trade restrictions.

A diplomatic source, however, familiar with talks of Turkish deputy foreign minister Sedat Onal in Washington this week, told The National that exchanging Mr Brunson for Mr Atilla is not on the table from the USA side.

Turkey's trade ministry said the US tariff moves were against World Trade Organization rules.

"The dollar can not block our path".

Despite Trump's insistence, Turkey has not budged in freeing American pastor Andrew Brunson, who has been detained by Turkey for nearly two years on charges that he was working with a terrorist organization and was a spy.

The Turkish lira plunged on Friday, raising questions about the country's financial stability, as investors anxious about the president's unorthodox economic policies and a dispute with the United States that has led to sanctions.

Markets are deeply concerned over the direction of domestic economic policy under Erdogan with inflation at almost 16 percent but the central bank reluctant to raise rates in response. "While they have dollars, we have our people, law and Allah", the Turkish leader said addressing citizens in the Black Sea city of Rize. Hard currency debt issued by Turkish banks suffered similar falls. Earlier, it had crashed some 12 percent through the 6.00 level for the first time in history, trading at one point at more than 6.20 lira per dollar.

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