Trump doubles steel & aluminum tariffs on Turkey

The lira went into free-fall sinking more than 10 percent

U.S. President Donald Trump said Friday he had authorized the doubling of steel and aluminum tariffs with respect to Turkey, as tensions mount between the two North Atlantic Treaty Organisation allies.

The United States is the biggest destination for Turkish steel exports.

On Friday, the euro sagged to a 13-month low against the dollar, down 0.7 per cent to $1.1450, after the Financial Times reported that the European Central Bank was anxious about possible losses at eurozone banks operating in Turkey.

Securing the release of Brunson, arrested in 2016, is a top priority for the United States, and it is also tussling with Turkey over the detention of three locally employed US embassy staff, trade issues and differences over Syria.

The lira dropped by over 11 percent in value in one day on Friday morning to almost six lira per dollar.

Trump announced the doubling of aluminum and steel tariffs in a tweet Friday, citing bilateral strains. Trump said Friday on Twitter.

"The reason local denominated bonds have been hurt is the potential trade war initiated by the Trump tariffs", explains Maizel, "Most emerging countries live and die from commodities and the fear of lower markets hurts them".

Financial upheaval there risks further destabilising an already volatile region. The first one was Erdogan gave a speech doubling down on his failed policies, saying once again all their problems were the result of an "economic war" being waged against Turkey.

The new duties on Turkey are double the level that Trump imposed in March on steel and aluminium imports from a range of countries. "Section 232 tariffs are imposed on imports from particular countries whose exports threaten to impair national security as defined in Section 232, independent of negotiations on trade or any other matter".

Turkey's trade ministry said the tariffs were against World Trade Organization rules.

Erdogan said Turkey is not afraid of outside "threats". Aluminum will now be 20% and Steel 50%.

Ivo Daalder, a former United States ambassador to North Atlantic Treaty Organisation and now president of the Chicago Council on Global Affairs think-tank, said Turkey could grind decision-making at Nato's headquarters in Brussels to a halt if the dispute with Trump got out of hand. "Don't forget, if they have their dollars, we have our people, our God". The U.S. exported $9.75 billion worth of goods-mostly cotton, scrap iron, steel, civilian aircraft parts, coal, and petroleum gases-to Turkey, and imported $9.42 billion worth of goods from them.

The lira sell-off has deepened concern about exposure to Turkey, particularly whether over-indebted companies will be able to pay back loans taken out in euros and dollars after years of overseas borrowing to fund a construction boom under Erdogan.

"One area we are more concerned about is contagion into the European market via the banking sector". Gulen denies the allegation.

Andrew Brunson has been in Turkish custody since 2016, when he was arrested on charges of terrorism and support of a group held responsible for an attempted coup of Turkish President Recep Tayyip Erdogan.

His cause resonates with Mr Trump's Christian conservative supporters.

The Washington Post newspaper said the US administration was doing everything to strengthen its hand in the Brunson case, but the decision would do nothing but cause more problems for bilateral relations. He offered no further details. The White House dismisses the charges as baseless and has accused Ankara of hostage taking.

Erdogan today called on Turks to support their struggling currency.

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