U.S. tariffs hike adds to Turkey's economic problems

Mr. Erdogan repeated his call for Turks to sell dollars and buy lira to shore up the currency, while telling business owners not to stock up on dollars.

Erdoğan had warned Saturday that Turkey would start looking for new friends if the USA continued with its unilateral actions against a North Atlantic Treaty Organisation ally, in a diplomatic row that has sent Ankara and Washington relations to a new low.

The lira tumbled about 10 per cent on Friday to another record low as investors worry about Erdogan's unorthodox economic policies and U.S. sanctions.

The currency's drop - 41 percent so far this year - is a gauge of fear over a country coming to terms with years of high debt, global concern over President Recep Tayyip Erdogan's push to amass power, and a souring in relations with allies such as the U.S.

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

Mr Brunson, an evangelical Christian, has been held since October 2016 on charges of terror and espionage, and if convicted, could face a jail term of 35 years. Mr. Trump tweeted Friday morning.

Cornell University economist Eswar Prasad told the New York Times Friday that Trump's announcement sets "a worrying precedent for future trade sanctions that could be triggered by purely market-driven changes in exchange rates ..."

He said the tariffs on aluminum imports would be increased to 20 percent and those on steel to 50 percent as the Turkish lira "slides rapidly downward against our very strong Dollar!"

Erdogan appeared to indicate that the entire alliance between Turkey - which joined North Atlantic Treaty Organisation in 1952 with strong American backing - and Washington was at stake.

The US has demanded the release of Andrew Brunson and on Friday doubled tariffs on steel and aluminium imports.

The U.S.is the biggest destination for Turkish steel exports with 11 percent of the Turkish export volume.


The president is "not happy with Turkey's decision not to release Pastor [Brunson]", White House press secretary Sarah Sanders said.

Turkey vowed retaliation "without delay" and warned the move would further harm relations between the two allies.

Turkish President Recep Tayyip Erdogan said in a speech that the drop was part of a "campaign" led by foreign powers against the nation.

Meanwhile, markets are deeply concerned over the direction of economic policy under Erdogan, with inflation at almost 16 percent but the central bank reluctant to raise rates in response.

Erdogan said high foreign exchange rates were the means used in plots against Turkey.

Analysts say that while Washington's sanctions against Ankara sparked the immediate crisis, Turkey's economy has been risking trouble for a while due to high inflation and the weak lira.

On Sunday, he said the lira's free-fall was the result of a plot and did not reflect Turkey's economic fundamentals.

Erdogan appealed to a crowd in the city of Bayburt to exchange dollars and gold for Turkish lira to prop up the plunging currency.

"This is a national, domestic battle".

The Turkish president also pointed out that Turkey was considering other markets and political alternatives to its "strategic partnership" with Washington, branding again the currency crash as an "economic war".


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