Turkey says Trump tariff move will harm ties, vows retaliation

14 August, 2018, 00:27 | Author: Darnell Patrick
  • Turkish Finance Minister Berat Albayrak

U.S. President Donald Trump ramped up his attack on Turkey by raising steel and aluminium tariffs to 50 percent and 20 percent respectively.

Mr. Trump raised tariffs on Turkish steel imports to 50% and aluminum to 20%.

Turkey's currency plunged Friday - accelerated by a hostile tweet from President Donald Trump - causing financial markets to tremble and showing that the country is as much a risk to the world economy as it is a geopolitical flash point.

The moves stem from Trump's frustration over detained American pastor Andrew Brunson held by Turkey.

It did not disclose details, but suggests Turkey might gravitate further away from its North Atlantic Treaty Organisation allies toward cooperation with Russian Federation, whose relations with the West are at their lowest since the Cold War.

Turkey's trade minister says Turkey is "deeply disappointed" by the decision.

The United States has denied Turkey's request for deporting Fethullah Gulen, a USA -based Turkish cleric who Ankara says is the main perpetrator of the 2016 coup.

Trump added that the Turkish currency Lira "slides rapidly downward against our very strong Dollar!"

Turkey was facing artificial financial volatility, Erdogan said, and people should not pay close attention to foreign exchange prices, and should instead focus on the "big picture".


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 global platforms. He claims higher rates lead to higher inflation - the opposite of what standard economic theory says.

Istanbul Chamber of Industry on Friday called for urgent measures to cushion the potential damage of a free-falling lira on real sector, saying the fluctuation has turned into a source of financial instability. Only 4 percent of U.S. steel imports came from Turkey in the first half of 2018, with the volume dropping nearly 50 percent from 2017, according to data from the Office of the U.S. Trade Representative.

But that does not appear to be on the table as Erdogan pursues low rates to keep growth humming.

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. This will be my people's response to those who have waged an economic war against us'.

New Finance Minister Berat Albayrak - Erdogan's son-in-law - acknowledged that the central bank's independence was critical for the economy, promising stronger budget discipline and a priority on structural reforms.

The new set of economic steps are aimed at securing an economic growth of 3-4 percent in 2019, and decreasing the inflation rate to single digits, the Ministry of Treasury and Finance said in a press release on August 9. As the currency drops, Turkish companies and households with debt in foreign currencies see the cost of repaying those loans expand.

The euro sagged to a 13-month low against the dollar on concerns that European banks operating in Turkey could suffer losses.

The trade actions "threaten important energy infrastructure projects", said Catherine Landry, a vice president at trade group Interstate Natural Gas Association of America.

"We are moving forward with the project, but believe that imposing a tax on pre-existing orders is unjust, especially considering the specific materials we purchased overseas were not readily available in the U.S.", Willie Chiang, Plains' chief operating officer, said on Tuesday.

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