Turkey says Trump tariff move will harm ties, vows retaliation

Irving Hamilton
August 11, 2018

Turkey's economy is regarded as fragile because of its high debt, which the worldwide Monetary Fund estimates is 50 percent of its gross domestic product. Aluminum will now be 20% and Steel 50%.

The sanctions will freeze the United States assets of Turkey's minister of justice, Abdulhamit Gul, and its minister of interior, Suleyman Soylu.

That is unlikely to mollify investors who are also anxious by the growing dispute with the United States. Conservative evangelical Protestants are a key constituency at home for U.S. President Donald Trump.

The move against President Recep Tayyip Erdogan's government also highlights the disconnect between Turkey and the U.S.as they fail to negotiate their way out of an array of conflicts.

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 lira, which has lost a third of its value this year, fell on his comments and was trading at around 6.05 to the dollar after he spoke, almost 9 percent weaker on the day. The currency has fallen more than 40 per cent this year, fanning worries about a full-blown economic crisis.

The Turkish lira is in a state of crisis, as a result of investor confidence in Turkish assets remaining at alarmingly low levels.

The lira has lost around 20% of its value in the last 24 hours.

Turkish President Recep Tayyip Erdogan and his newly appointed finance minister, Berat Albayrak, are due to speak at 2 p.m. local time Friday. "It is a national fight", he told a crowd in the northeastern city of Bayburt.

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The US responded by imposing sanctions on Turkey and threatening more. But some investors fear the Turkish economy is growing too quickly and could face problems.

Erdogan has been putting pressure on the central bank not to raise interest rates in an attempt to help borrowers.

Erdogan enjoys the support of many Turks even though food, rent and fuel prices have all surged.

US President Donald Trump has announced to double steel and aluminum tariffs on Turkey, saying relations between Washington and Ankara "not good" as tensions mount between the two countries. The currency's slide deepened early Friday, after the Financial Times reported that the eurozone's chief financial watchdog was concerned about how some of Europe's biggest lenders would be affected by a crisis in Turkey.

The diplomatic tension and the failure of Turkish officials to persuade the United States to lift the sanctions plunged the lira to new lows this week.

The lira's slide came after a USA delegation from Washington, D.C., left Turkey without making progress toward the release of Andrew Brunson, an American pastor detained by Erdoğan's government since 2016.

Turkey has accused Andrew Craig Brunson of spying and "committing crimes on behalf of terror groups without being a member". U.S. President Donald Trump introduced a round of sanctions on August 1, preventing the Turkish justice an interior ministries from doing business with U.S. businesses.

Brunson, a USA citizen and Turkish resident for over two decades, was arrested in Turkey on charges of terrorism and espionage. Some 4 million displaced people, most them from Syria, are now living in Turkey. "Relations with countries who behave like this have reached a point beyond salvaging". These include places "from Iran, to Russian Federation, to China and some European countries", he said. He claims higher rates lead to higher inflation - the opposite of what standard economic theory says.

This story is based in part on wire service reports. Mario Ritter was the editor. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

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