Economy

Trump's decision to double tariffs on Turkey 'brutal'

Trump's decision to double tariffs on Turkey 'brutal'

A looming debt crisis that potentially involves a Turkish request for assistance or a bailout from the International Monetary Fund could have significant European and global economic repercussions.

Turkey is world's sixth-biggest steel producer, and eighth largest steel importer for the U.S. according to the International Trade Administration. European and American bank stocks declined on concerns about their exposure to Turkey.

U.S. President Donald Trump said Friday he had authorized the doubling of steel and aluminum tariffs with respect to Turkey, as tensions mount between the two North Atlantic Treaty Organisation allies. 'On some days, I end the day with a loss'.

The lira's fall has been made worse by President Recep Tayyip Erdogan's statements on economic policy.

In New York, the Dow Jones Industrial Average fell 185.15 points, or 0.73 per cent, to 25,324.08.

But Erdogan, who had remained unusually silent until now as the lira crisis mounted, urged Turks to take matters into their own hands.

Prior to Trump's announcement, the Turkish lira fell to its lowest point ever against the US dollar on Friday. The White House said he had authorized them under Section 232 of US trade law, which allows for tariffs on national security grounds.

On June 21, Turkey's retaliatory tariffs went into effect on 4 to 70 percent of more than $1 billion worth of USA goods. "This is a domestic and national struggle", Erdogan said according to CNBC.

USA stocks fell Friday amid the geopolitical concerns that pushed the Turkish lira to the record low against the dollar.

Turkey remains at loggerheads with the U.S. in one of the worst spats between two North Atlantic Treaty Organisation allies in years over the detention of American pastor Andrew Brunson and a host of other issues.

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Turkey exported $1.04 billion (€0.91 billion) worth of steel and $60 billion worth of aluminum to the U.S. in 2017, according to the Hurriyet newspaper.

Image: Donald Trump claimed 'relations with Turkey are not good at this time!'

Hordijk said in an email: "President Erdogan is the elephant in the room ..."

Officials from Mr Erdogan's office said the two men "expressed pleasure" that relations between Turkey and Russian Federation were progressing "positively" amid joint defence and energy projects.

A statement from the Kremlin said the two leaders discussed economic and trade ties.

"The United States should know that the only result that such sanctions and pressure will bring... will be harming our relationship as allies", the foreign ministry said in a statement.

It added that Trump's remarks were "not possible to reconcile with state seriousness".

A man checks foreign currency exchange rates outside a currency exchange shop in an Istanbul's market, Friday, Aug. 10, 2018. As the lira continues to weaken, this foreign debt becomes increasingly hard and expensive for Turkey to manage, which should further exacerbate the currency's decline. They do not fully exclude an option of a massive hike by the TCMB and believe that probability of capital controls has greatly increased.

The report said the situation is not yet seen as "critical" but Spain's BBVA, Italy's UniCredit and France's BNP Paribas are regarded as particularly exposed.

The latest escalation came as Turkey's Economy Minister Berat Albayrak, who is Erdogan's son-in-law and a trusted lieutenant, unveiled what was touted as a new economic plan, pledging Central Bank independence, tighter budget discipline and sustainable and healthy growth.