Trump authorizes doubling of tariffs on Turkey's steel, aluminum

Trump authorizes doubling of tariffs on Turkey's steel, aluminum

Cheryl Sanders
August 11, 2018

"The US should not forget that it could lose a strong and honest partner like Turkey if it does not change its attitude", he was quoted as saying by Hurriyet daily.

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The Turkish lira has always been falling on worries about Erdogan's influence over monetary policy and worsening relations with the United States.

The currency slid almost 8 percent in relation to the dollar to a record low of 6.59 shortly after Trump announced the increase on metals duties on Twitter. "Aluminum will now be 20% and Steel 50%", Trump said in a tweet. "It could serve as a template for further tariff actions against China if the renminbi depreciates further relative to the dollar, even if that depreciation were mainly a reflection of the relative strength of the US and Chinese economies". He added, "Our relations with Turkey are not good at this time!". Turkey's energy minister announced on August 8 that Turkey will keep buying liquid natural gas from Iran in violation of USA sanctions.

Ankara sent a delegation this week to Washington to meet with both the State and Treasury Departments to resolve some of the disputes but those talks showed no signs of breakthrough. As the lira falls in value, the debt becomes harder to pay.

The president's characteristic defiance in the face of a shaky economy has further unnerved investors.

"This will be the response to those who have declared an economic war", he said, blaming Turkey's woes on what he described as an "interest rate lobby" seeking to push the country to higher rates.

"Those who have dollars, euros or gold under their pillows should go and exchange them into [Turkish] lira".

'This is a national, domestic battle. "We will not lose the economic war", state-run TRT Haber television quoted Erdogan as saying.

"The dollar can not block our path".

The country's president told a crowd of supporters in a Turkish town on the Black Sea coast: "You can never bring this nation in line with the language of threats". Investors in Turkey are also anxious about President Erdogan's interference in the country's central bank.

One economically-illiterate leader is crippling his own economy and blaming everyone else for it, which then turned out to be partially correct when another economically-illiterate leader made a decision to cripple their economy as payback for what they have done to themselves.

"The basic reason the exchange rate has gone off the rails is that confidence in the management of the economy has disappeared both domestically and overseas", said Seyfettin Gursel, a prominent economist and a professor at Turkey's Bahcesehir University.

"Confidence needs to be regained". The central bank noted that Spain's BBVA, Italy's UniCredit and France's BNP Paribas all have significant exposure to Turkish debt and that a crashing lira could affect repayment of foreign currency loans.

The latest escalation came as Turkey's Economy Minister Berat Albayrak, who is Erdogan's son-in-law and a trusted lieutenant, unveiled what was touted as a new economic plan, pledging Central Bank independence, tighter budget discipline and sustainable and healthy growth. "Turkey is an important strategic partner militarily and economically".

This did nothing to revive the currency.

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