Published: Sat, August 11, 2018
Economy | By Shawn Conner

U.S. media criticizes Trump's tariffs decision on Turkey

U.S. media criticizes Trump's tariffs decision on Turkey

U.S. President Donald Trump said on Friday he had authorised higher tariffs on imports from Turkey, imposing a 20 percent duty on aluminium and 50 percent one on steel, as tensions rose between the two North Atlantic Treaty Organisation allies over Ankara's detention of an evangelical pastor and other diplomatic issues.

The new duties on Turkey are double the level that Trump imposed in March on steel and aluminium imports from a range of countries. Trump said in an early morning post on Twitter. The president launched his steel and aluminum tariffs on the grounds that maintaining a robust domestic metal industry was a core national-security interest of the United States, and that competition with metal imports was threatening to drive said industry into extinction.

Turkey exported $1.04 billion (€0.91 billion) worth of steel and $60 billion worth of aluminum to the U.S. in 2017, according to the Hurriyet newspaper.

The embattled Turkish lira tumbled over 16 percent to new record lows against the dollar on Friday as strains with the United States intensified, but President Recep Tayyip Erdogan defiantly proclaimed Turkey would emerge victorious in an "economic war".

"Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks".

The lira tumbled 14 per cent in one day, to 6.51 per dollar, a massive move for a currency that will make the Turkish poorer and further erode global investors' confidence in the country.

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Turkish President Recep Tayyip Erdogan said Turks should not be alarmed by exchange rate movements. "Relations with countries who behave like this have reached a point beyond salvaging", said Erdogan, who warned of "economic war".

Erdogan appealed to a crowd in the city of Bayburt to exchange dollars and gold for Turkish lira to prop up the plunging currency.

On August 1 Washington announced sanctions against Turkey's justice and interior ministers, prohibiting U.S. entities and citizens from doing business with them, after threatening to impose "large sanctions" if Ankara failed to free Brunson. I hope we can soon get Pastor Brunson and other Americans released in a win-win fashion for both the U.S. and Turkey."Trump's move to double tariffs on Turkey was even praised by one of the president's most frequent Democratic critics". He subscribes to the completely backward theory that lower interest rates cause lower inflation, which, now that he's given himself the power to pick the country's top central banker and made his son-in-law the finance minister, is actually being put to the test. Spoiler alert: It is not going well.

But Turkey is not manipulating its currency; the lira is falling because the country is suffering from an economic crisis.

He declared: "Our relations with Turkey are not good at this time!".

The lira's decline caps a week of political news that's unnerved investors, as the USA ramped up sanctions on Turkey and Russian Federation and as the United Kingdom fretted over a so-called no-deal Brexit.

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The Yapi Kredi stake is valued on the bank's books at $2.5 billion and is now worth $1.5 billion, Credit Suisse said.

The lira was trading at 5.95 to the dollar, a loss on the day of 7.5 percent.

The diplomatic dispute with the USA was one of the triggers that turned market jitters into a full-blown route this week.

Adding to Turkey's fiscal woes, new pension and spending increases announced by president Erdogan in the lead-up to his recent election win have further weakened the outlook for Turkey's public finances.

And of course, Brunson and the other detainees, including local staff of the United States diplomatic mission and various persons thought in some cases to be Gulenist Turkish-Americans, would have to be released. The currency has fallen more than 40 per cent this year, fanning worries about a full-blown economic crisis.

While the International Monetary Fund has a history of lending a hand to Turkey, Erdogan is wary of the organization, creating barriers to a bailout. Overnight it had retreated to its lowest since November 2016 on threats of new US sanctions, weakening beyond the psychologically important 65-per-dollar threshold.

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