Higher US tariffs increase pressure on Turkish economy

Euro vs US Dollar Chart- 5min

"I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar!"

The US dollar surged to new 2018 highs in the early hours of Friday morning on a mixture of concerns over the currency situation in Turkey, consistent expectations on the performance of the US economy and the outlook that the United States should be better prepared to handle the negative headwinds from a trade war, in comparison to those economies that it targets.

Investors fear Turkey is teetering on the edge of financial crisis following a dramatic plunge in its currency that has gathered pace this week.

Reverberations spread through global markets, with European stockmarkets especially hit as investors took fright over banks' exposure to Turkey.

Last week, the U.S.

The lira, which has lost a third of its value this year, fell on his comments and was trading at around 6.05 to the dollar after he spoke, almost 9 percent weaker on the day.

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? Put these all together, and you get a pretty classic emerging markets crisis: Money has been leaving Turkey because it can now get good enough returns elsewhere, which is then pushing down the value of their currency so much that their dollar debts are getting harder to pay back.

"In this process, we will finely work every single detail as a wide spectrum including all national and worldwide stakeholders", he said in the first part of his speech, referring to Turkey's Medium-Term Economic Plan (OVP), which will soon be renamed.

The new duties on Turkey are double the level that Trumpimposed in March on steel and aluminum imports from a range ofcountries.

However, the White House later clarified that Trump's announcement "authorised the preparation of documents" to raise the tariffs.

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

"Some countries have engaged in behavior that protects coup plotters and knows no laws or justice", he said. Aluminum will now be 20% and Steel 50%.

But Aykan Erdemir, of the Foundation for Defense of Democracies, said Mr Trump's tariffs announcement comes "at the worst possible time for Mr Erdogan" and fits with United States strategy to increase pressure on Ankara until Mr Brunson is released. "If they have their dollar, we have the people, we have Allah".

The meetings came as Turkey seeks to stanch an economic meltdown amid fallout from US sanctions imposed last week over the continued detention of the pastor, Andrew Brunson, who was jailed on espionage and terrorism suspicions more than two years ago and recently released to house arrest.

In what appears to be a diplomatic riposte, Turkey later said Mr Erdogan had held a phone call with Russian President Vladimir Putin to discuss economic ties.

Turkey wants the United States to extradite cleric Fethullah Gulen, a Pennsylvania-based cleric who Turkish authorities say masterminded the coup attempt in which 250 people were killed. Gulen denies the allegation.

The lira's slide came after a US delegation from Washington, D.C., left Turkey without making progress toward the release of Andrew Brunson, an American pastor detained by Erdo─čan's government since 2016.

His cause resonates with Trump's Christian conservative supporters, who could be influential as Republicans seek to retain control of Congress in midterm elections in November. Negotiations for his release broke down when Turkey refused to free Brunson after his third courtroom hearing on July 18. He offered no further details. Minutes before Ankara learned about the higher tariffs, the lira had already hit an all-time low of 6.87 against the dollar.

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