Trump announces 'doubling' of tariffs on steel, aluminum on Turkey

Berat Albayrak

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. The lira, which had already lost one-third of its value this year largely over worries about Erdoğan's wider control of the economy, is at a fresh record low, at one point losing 18%, its biggest fall since 2001.

US patience with Turkey is seen to have ended, experts said.

The currency has fallen 66 per cent since the start of the year, pushing up the cost of goods for Turkish people and shaking global investors' confidence in the country.

President Donald Trump announced tariff increases on Turkish metals as tensions between Turkey and the United States escalated.

"I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar!"

In the New York Times, Erdogan warned Washington not to risk relations with Ankara, saying his country would otherwise look for "new friends and allies". Put these all together, and you get a pretty classic emerging markets crisis: Money has been leaving Turkey because it can now get good enough returns elsewhere, which is then pushing down the value of their currency so much that their dollar debts are getting harder to pay back. European and emerging-market equities bore the brunt of selling, with losses of more than 1 per cent after the United States escalated a diplomatic row that tipped Turkey's economy deeper into crisis. The White House said he had authorised them under Section 232 of United States trade law, which allows for tariffs on national security grounds.

The US has refused to extradite Fethullah Gulen, who lives in Pennsylvania.

Rep. Ted Lieu (D-Calif.), who has voiced support for impeaching the president, tweeted Friday, "On this I agree with [Trump]".

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Even before Trump's announcement, President Tayyip Erdogan told Turks to exchange gold and dollars for lira in order to fight "an economic war".

He does have an understandable reason: Turkey has been holding an American pastor captive for 21 months, on grounds that the preacher was involved in the failed coup attempt against Turkish president Recep Tayyip Erdogan in 2016.

"If you have dollars, euros or gold under your pillow, go to banks to exchange them for Turkish lira".

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.

A Turkish man waits to change his USA dollars with Turkish liras inside a currency exchange shop in Ankara, Aug. 10, 2018. "This is a domestic and national struggle". On Friday, he said the country had to take steps in answer "to those who have waged an economic war against us".

The attempted coup is at the center of the most recent fallout between Washington and Ankara over the detention of Brunson, a pastor from North Carolina who has lived in Turkey for over 20 years. It is obvious how it will be done: "since the final decision-maker of all policies in the new regime is the president, the responsibility of regaining confidence is on his shoulders", said Seyfettin Gursel, a professor at Turkey's Bahcesehir University. Since the last financial crisis, Turkey has posted impressive growth figures but over recent years this growth has been accompanied by increasing debt.

New Finance Minister Berat Albayrak - Erdogan's son-in-law - rolled out the government's new economic plan on Friday, promising central bank independence and tighter budget discipline, but giving few details to reassure investors.

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