Published: Sat, August 11, 2018
Money | By Armando Alvarado

Trump doubles tariffs on Turkish metals

Trump doubles tariffs on Turkish metals

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

President Tayyip Erdogan has told Turks to sell their gold and US dollars to support the country's currency which plunged after US President Donald Trump escalated a feud with North Atlantic Treaty Organisation ally Turkey by doubling tariffs on metals imports. Trump said Friday on Twitter. A 20 percent fall in exports would only reduce GDP by 0.1 percentage point or less per year in the 19 countries that use the euro currency.

President Trump seems to think that Turkey has been trying to take advantage of us by having an economic crisis that's sent their currency tumbling.so he's taken steps to make it tumble even more?

The tariff for steel imported from Turkey will now be 50 percent.

The lira fell as low as 6.75 to the dollar, down a whopping 14 percent on the day and 41 percent since the start of the year as investors worry about the country's economic policies and a dispute with the United States that has led to sanctions and new tariffs.

On Friday, Erdogan asked Turkish citizens to sell off their gold and dollars and exchange them for the lira, in an attempt to prop up the currency.

Fears of contagion from the Turkish lira meltdown sparked a rout on European markets as president Recep Tayyip Erdogan refused to bow to investor pressure.

President Recep Tayyip Erdogan says his government "will not lose the economic war".

"A US-induced crisis in Turkey will create a new martyr in the region, with far-reaching consequences which American congressmen and President Trump do not foresee", Bulent Gultekin, a professor at the Wharton School of the University of Pennsylvania and the former Turkish Central Bank governor, told MEE.

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While Turkey and the United States are at odds over a host of issues, the most pressing disagreement has been about the fate of American Christian pastor Andrew Brunson, who is on trial on terrorism charges for allegedly supporting a group that Ankara blames for the failed coup.

Erdogan, whose typical defiance in the face of the crisis has further unnerved investors, appealed to Turks' patriotism and urged support for their free-falling currency.

A statement from the Kremlin said the two leaders discussed economic and trade ties. His comments on interest rates - and his recent appointment of his son-in-law as finance minister - have heightened perceptions that the central bank is not independent.

High-level meetings in Washington between USA and Turkish officials over Brunson ended this week, apparently without a resolution.

The current market expectation is that a rate increase of at least 5pc, from the current 17.75pc interest rate, will be required to stem the tide of Lira losses and traders are nervously awaiting any announcement of an emergency central bank meeting which may happen next week.

But Carsten Hesse, analyst at Berenberg bank in London, says that an economic downturn in Turkey would have limited impact on Europe or other major economies.

On Thursday, Mr Erdogan said: "If they have their dollar, we have the people, we have Allah".

Erdogan and his newly appointed finance minister, Berat Albayrak, are due to speak at 2 p.m. local time Friday.

It is a Coen brothers-level farce the people of Turkey and every other emerging market that's been caught up in what's now a broader currency sell-off are not laughing at.

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