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

Jeannie Matthews
August 11, 2018

It came as a Turkish delegation returned from the United States, reporting no progress on negotiations involving a US pastor imprisoned in Turkey.

Fears over contagion even pushed global equity markets lower, with some European banks coming under heavy selling pressure due to their exposure to Turkey.

Erdogan has appealed to the people to convert their dollars to liras, saying Turkey is in the midst of an "economic war" with the West.

The lira fell 7% against the dollar to 5.9655 on Friday morning after hitting an all-time low earlier in the session. Erdogan has frequently blamed an "interest rate lobby" and Western credit ratings agencies for trying to bring down Turkey's economy.

"This is a domestic and national struggle", Erdoğan said, according to The Associated Press.

Trump said Friday on Twitter that he authorized a new 20 percent tariff on aluminum and 50 percent tariff on steel from Turkey.

It fell to a record low this morning, and has now dropped 18 per cent today to 6.5 lira to the dollar, compared with 5.5 lira last night, as a deepening monetary crisis and diplomatic relations with the U.S. deteriorated.

Erdogan called on Turks to not be concerned about exchange rate movements, mockingly declaring "the dollar, the mollar will not cut our path". But since adopting increased powers, Mr Erdogan appears to have greater control over the bank as well.

That is unlikely to mollify investors who are also anxious by a growing dispute with the United States.

Turkey later warned the United States that sanctions and pressure would only serve to harm ties between the two North Atlantic Treaty Organisation allies, adding Ankara would continue to retaliate as necessary against US tariffs. -Turkish tensions are threatening a financial crisis in Turkey.

"Confidence needs to be regained". In response, the currency renewed its sell-off.

More evidence that emerging currencies were having a bad day came from Russian Federation, where the ruble dived again on Friday and is now down five percent since the USA on Wednesday hit Russian Federation with new sanctions over its alleged involvement in a nerve agent attack in Britain.

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Concerns are mounting that the decline will start to hit European banks. The lira slid to a fresh record low against the US dollar.

Trump commented on the issue as the Turkish lira has fallen 36 percent in 2018, and the country faces increasing debt without foreign investment. It is unclear how that would justify higher tariffs on Turkey but not other countries.

Severe economic and geopolitical troubles that have continued to plague Turkey combined on Friday to cause the exceptionally sharp currency moves. There would be a transformation in the finance ministry with regards to taxation, he said. Because the dollar is the first, or base, currency in the USD/TRY currency pair, the sharp rise on the chart illustrates the dramatic weakening of the lira against the dollar. It fell yet further to 6.2 to the dollar at 1254 GMT, almost 12 percent weaker on the day.

The Turkish lira has lost 13 per cent of its value against the dollar since midnight, pushing the battered currency further into crisis.

The lira's relentless depreciation drives up the cost of imported goods from fuel to food for ordinary Turks.

"Turkey is playing a very unsafe game". To do that, they have to sell lira - worsening the rout.

Concerns about rapidly rising inflation in Turkey - above 15% year-over-year in July - have not been addressed by corresponding hikes in interest rates by the country's central bank.

While Turkey and the United States disagree over a host of issues, the most pressing disagreement has been over Brunson and the detention of other U.S. citizens in Turkey.

Hoping to put pressure on the North Atlantic Treaty Organisation ally to free the pastor, the White House sanctioned two top Turkish government officials.

While there was no statement from the Turkish side, US State Department spokesperson Heather Nauert said wide-ranging conversations had been held.

'However, I say it once again from here.

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