Published: Tue, August 14, 2018
Markets | By Terence Owen

Trump authorizes doubling of steel, aluminum tariffs on Turkey

Trump authorizes doubling of steel, aluminum tariffs on Turkey

Turkish President Tayyip Erdogan on Saturday said it was wrong of the United States to try to bring Turkey into line with threats, a day after President Donald Trump doubled tariffs on Turkish metal imports as the row between the two North Atlantic Treaty Organisation allies deepened.

Trump said he had authorised higher tariffs on imports from Turkey, imposing duties of 20 percent on aluminium and 50 percent on steel. "Our relations with Turkey are not good at this time!" the President tweeted on Friday.

Mr Trump's tweet caused a further drop in the Turkish currency, which is now down 13% on the day.

Turkey's trade minister says Turkey is "deeply disappointed" by the decision. She called on Trump to return to the negotiating table, saying "this can and should be resolved through dialogue and cooperation".

"President Trump's refusal to accommodate Turkey is a remarkable departure from previous policy practices", said Jack Ablin, chief investment officer at Cresset Wealth Advisors, who added that he would be gauging the extent of a spillover into other emerging markets and European banks.

"Repeated efforts to communicate to the United States administration that none of the stated criteria driving America's tariffs are applicable to Turkey have thus far proven fruitless", Pekcan said in a statement.

Separately, Pekcan's ministry said the tariffs were a violation of World Trade Organization rules and that it would defend Turkish producers' rights at the trade body and other worldwide platforms.

"He is using tariffs as a threat to get what he wants politically or economically", she said, adding "the message he sends is that he can not be trusted".

As with the financial crisis set off by Greece in 2010, Friday's events were the latest example of how troubles in a nation with a midsize economy but world-class problems could threaten financial stability further afield.

Presenting the government's new economic model, he said the next steps of rebalancing would entail lowering the current account deficit and improving trust.

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U.S. imports of Turkish steel account for 4 percent of total steel imports, according to statistics from 2017.

Albayrak was speaking at a conference where he outlined his ministry's "new economic policy" as the currency plunged, raising questions about the country's financial stability.

But President Erdogan brushed off any concerns during a speech in the northeastern city of Bayburt on Friday, saying: 'The dollar can not block our path.

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

"This will be my people's answer to those who declare economic war against us", he added.

His comments on interest rates - and his recent appointment of his son-in-law as finance minister - have heightened perceptions that the central bank is not independent.

Investors fear that banks in Asia and Europe could suffer because they have invested in Turkish assets like stocks, bonds or the currency itself. "Those who think they will make us kneel via economic manipulation do not know us at all", he said.

The lira hit a record low of 6.24 per dollar on Friday, before recovering to 5.92 - still down a whopping 7 per cent on the day.

In an opinion piece in the New York Times on Friday, Erdogan said Turkey's partnership with the United States could be in jeopardy unless Washington "starts respecting Turkey's sovereignty".

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