Higher US tariffs on steel imports from Turkey take effect

Jermaine Castillo
August 14, 2018

Meanwhile, Ankara announced its rejection of the resolution, insisting it would reciprocate.

"As with all measures taken against Turkey, the necessary response will be given", it said, adding the move "disregarded" rules of the World Trade Organisation (WTO).

"Repeated efforts to communicate to the USA administration that none of the stated criteria driving America's tariffs are applicable to Turkey have thus far proven fruitless", Turkish Trade Minister Ruhsar Pekcan said.

An analyst at Berenberg bank in London is downplaying the risks to Europe's economy from Turkey's currency turmoil, saying the impact on trade would be small. Early on Friday, the currency hit an all-time low of 6.30 against the U.S. dollar, Xinhua reported.

Last week, the Trump administration said it would review Turkey's duty-free access to US markets, a decision that could impact some $1.7 billion of imports. "Aluminum will now be 20% and Steel 50%", Trump said in a tweet.

Recep Tayyip Erdogan
Turkey’s President Recep Tayyip Erdogan has been defiant in the face of US economic pressure

U.S. President Donald Trump intensified his spat with Turkey on Friday by imposing higher tariffs on metal imports, putting unprecedented economic pressure on a North Atlantic Treaty Organisation ally and deepening turmoil in Turkish financial markets.

On Friday the currency dropped as much as 18 percent at one point, the biggest one-day fall since a 2001 financial crisis in Turkey.

It has also lost more than 40 percent this year, hitting a new record low after Trump took steps to punish Turkey in a wide-ranging dispute.

"Nevertheless, we implore President Trump to return to the negotiating table - this can and should be resolved through dialogue and cooperation". Turkey ranks seventh among all countries in steel exports to the United States market.

The weakness on Wall Street came amid concerns about rising tensions between the US and Turkey due to the Turkish detention of USA pastor Andrew Brunson.

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President Tayyip Erdogan told Turks not to panic - but paradoxically urged them to buy lira to fight an "economic war". The lira, he noted on Twitter, "slides rapidly downward against our very strong Dollar!"

'If they have their dollar, we have the people, we have Allah, ' he said.

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.

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

Following the lackluster performance seen over the two previous sessions, stocks moved notably lower during trading on Friday. Japan's Nikkei 225 Index tumbled by 1.3 percent, while Hong Kong's Hang Seng Index dropped by 0.8 percent.

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There is also widespread fear among foreign investors that the populist, authoritarian government of President Recep Tayyip Erdogan is pursuing irresponsible economic policies while undercutting the independence of the central bank.

Albayrak gave a presentation to business leaders in Istanbul promising structural reform, economic re-balancing, and "sustainable and healthy growth".

He said Turkey has adopted very sensitive language on monetary policy and the central bank.

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.

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