United States to Increase Tariffs on Turkish Aluminum, Steel

United States to Increase Tariffs on Turkish Aluminum, Steel

U.S. President Donald Trump said he's authorized doubling some metals tariffs on Turkey, citing poor relations with the North Atlantic Treaty Organisation ally amid an escalating conflict over its detention of an American pastor.

Turkey says doubled tariffs on Turkish steel and aluminium announced by US President Donald Trump are against the rules of the World Trade Organisation (WTO). "Aluminum will now be 20% and Steel 50%", Trump said in a tweet.

"As he stated, the President has authorized the preparation of documents to raise tariffs on imports of steel and aluminum from Turkey".

Trump is also declaring that, "Our relations with Turkey are not good at this time!". Washington slapped tariffs of 25 percent on steel and 10 percent on aluminum in March for imports from several countries, including Turkey.

Garanti and its local peers face a wave of corporate defaults and loan restructurings as the lira's collapse makes it harder for Turkish companies to repay the dollars they have borrowed in recent years.

The lira plunged to as low as 6 against the United States dollar on Friday, a day after a Turkish delegation returned from talks in Washington with no apparent solutions to their simmering crisis.

Turkish President Recep Tayyip Erdogan said Turks should not be alarmed by exchange rate movements.

Economist Chad Bown, who specialises in trade issues, said Turkey accounted for just over four percent of USA steel imports in 2017, but a very small fraction of the aluminum brought into the country.

"If there is anyone who has dollars or gold under their pillows, they should go exchange it for liras at our banks".

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While Turkey and the United States are at odds over a host of issues, the most pressing disagreement for Trump has been the fate of American Christian pastor Andrew Brunson, who is on trial on terrorism charges for allegedly supporting a group that Ankara blames for a failed coup in 2016. I hope we can soon get Pastor Brunson and other Americans released in a win-win fashion for both the United States and Turkey."Trump's move to double tariffs on Turkey was even praised by one of the president's most frequent Democratic critics".

The US may also be stuck on Turkish demands to waive or minimise a treasury fine on Halkbank, a Turkish state bank involved in a court case over violating US sanctions on Iran. Rate increases are the central bank's main tool to support the currency and fight inflation. As of Friday morning, the lira was worth roughly 15 cents.

The currency drop is particularly painful for Turkey because the country finances a lot of its economic growth with foreign investment.

Erdogan urged Washington to give up the misguided notion that bilateral relations could be "asymmetrical" and realise that Turkey had alternatives "before it is too late".

While Turkey and the United States disagree over a host of issues, the most pressing disagreement has been over Brunson and the detention of other USA citizens in Turkey.

Turkish President Recep Tayyip Erdogan won another term in office in June with expanded powers.

The lira, which has lost more than 40 percent this year, hit a new record low after Trump took steps to punish Ankara in a wide-ranging dispute. Operations in emerging markets can lose significant value as the dollar strengthens, as it did Friday.

While the International Monetary Fund has a history of lending a hand to Turkey, Erdogan is wary of the organization, creating barriers to a bailout. There are fears that European markets are more exposed to Turkey shocks than has been priced in, while traders are jumping on any opportunity to sell the pound at present.

"While Turkey's fundamental challenges are numerous, there are plenty of straightforward textbook solutions.an aggressive interest rate hike from the Central Bank would be a good start, something of the order of +1,000bp that Argentina delivered back in May would be appropriate at this juncture".

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