Trump doubles metal tariffs on Turkey as lira falls by 20%

Larry Hoffman
August 13, 2018

The Turkish lira fell at least 13 percent Friday, as President Erdogan called for people to exchange their other forms of money to the lira. The currency is down about 40 percent so far this year.

Trump intensified the alarm on financial markets with his new tweet doubling the tariffs, noting for good measure the lira was sliding "rapidly downward against our very strong Dollar!".

Speaking to a crowd in his hometown of Rize on Saturday, Erdogan addressed the recent U.S. decision to sanction two Turkish officials over the detention of American pastor Andrew Brunson, who has been held in Turkey since 2016 over claims that he was linked to the failed coup attempt in July of that same year.

President Tayyip Erdogan told Turks on Friday (Aug 10) to sell their gold and dollars to support the crumbling lira, with the currency in free fall as President Donald Trump escalated a feud with Ankara by doubling tariffs on metals imports. "Repeated efforts to communicate to the U.S. administration that none of the stated criteria driving America's tariffs are applicable to Turkey have thus far proven fruitless", he said.

President Recep Tayyip Erdogan vowed Saturday to defy USA "threats" over a detained pastor, showing no signs of concessions in a bitter row that has caused the Turkish lira to crash. "He has done nothing wrong, and his family needs him!"

"If there is anyone who has dollars or gold under their pillows, they should go exchange it for liras at our banks", he said during an address to supporters.

"If they have the dollar, we have Allah", he said.

The news comes as tensions between the USA and Turkey continue to grow over the North Atlantic Treaty Organisation ally's continued detainment of Pastor Andrew Brunson.

The plunge in the value of the currency coupled with an inflation rate of almost 16% could cause a lot of damage to Turkey's economy.

Turkey said it would respond to the new USA tariff action "without delay" and warned the move would further harm relations between the two countries.

The sudden drop came when Donald Trump announced on Twitter he was doubling United States import tariffs on Turkish steel and aluminium.

Last week, the United States imposed sanctions on Turkey's justice minister and interior minister for not releasing pastor Andrew Brunson.

"President Erdogan's strengthened powers under the new presidential system have made it increasingly uncertain whether policymakers will be able to act to stabilise the economy", said William Jackson, chief emerging markets economist at Capital Economics in London. "Look at what we were 16 years ago and look at us now". The White House said he had authorised them under Section 232 of USA trade law, which allows for tariffs on national security grounds.

Turkey, home to the Incirlik air base that is used by USA forces in the Middle East, has been a North Atlantic Treaty Organisation member since the 1950s.

Erdogan also Friday held telephone talks with Russian President Vladimir Putin, discussing economic and trade issues as well as the Syria crisis, the Turkish presidency said.

"The US has to rehabilitate its addiction to sanctions (and) bullying or the entire world will unite - beyond verbal condemnations - to force it to", he warned. Sanctions and pressure would only serve to harm ties between the two North Atlantic Treaty Organisation allies, Hami Aksoy also said in a statement.

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