Published: Tue, August 14, 2018
Markets | By Jeffery Armstrong

Turkey says Trump tariff move will harm ties, vows retaliation

Turkey says Trump tariff move will harm ties, vows retaliation

Turkish President Recep Tayyip Erdogan says his country will continue to grow despite what he described as an "attack" on the Turkish lira.

Erdogan on Friday appealed for calm and called on people to change foreign money into local lira. On Thursday Ergodan said Turkey will withstand the economic pressure. The officials provided the information only on condition of anonymity according to protocol.

Turkey is home to the Incirlik air base which is used by USA forces in the Middle East, it host to a Key part of the Western alliance's missile defense system again Iran. Russian Federation is also building a nuclear power plant.

Turkey on Friday warned a move announced by US President Donald Trump to double steel and aluminium tariffs on the country would harm ties, vowing retaliation against a measure it said was against WTO rules.

The additional U.S. tariffs on steel imports from Turkey announced on August 10 will take effect today (August 13), said a report.

Treasury and Finance Minister Berat Albayrak on Friday also vowed sustainable and healthy economic growth as well as "strong struggle" against inflation, which now stands at close to 16 percent.

European bank 'remains committed' to Turkey

There would be a transformation in the finance ministry with regards to taxation, he said.

That is unlikely to mollify investors who are also anxious by a growing dispute with the United States.

"President Trump's refusal to accommodate Turkey is a remarkable departure from previous policy practices", said Jack Ablin, chief investment officer at Cresset Wealth Advisors, who added that he would be gauging the extent of a spillover into other emerging markets and European banks.

Turkey will adopt a new economic approach under its executive presidency, one that will be decisive, sustainable and based on a "strategic mentality", Treasury and Finance Minister Berat Albayrak said on Friday.

Turkey, a North Atlantic Treaty Organisation ally, put him on trial for espionage and terror-related charges linked to a failed coup attempt in the country two years ago.

The lira dropped by over 11 percent in value in one day on Friday morning to almost six lira per dollar.

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"If you have dollars, euros or gold under your pillow, go to banks to exchange them for the Turkish lira. This is a domestic and national struggle". This will be my people's response to those who have waged an economic war against us'.

As he spoke, the lira fell further - adding to worries about the country's financial stability.

Presenting the government's new economic model, he said the next steps of rebalancing would entail lowering the current account deficit and improving trust.

Internal political turmoil, soaring inflation and a burgeoning conflict with Trump over a jailed American pastor combined to destroy confidence in the Turkish lira, which lost 20 percent of its value against the dollar at one point Friday, dropping it to a record low.

"The US runs the risk of losing Turkey as a whole".

A doubling of steel and aluminum tariffs on imports of the metals from Turkey, affect steel trade flows more than aluminum. But he said that the possible losses seem "too small to cause a significant eurozone crisis".

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The euro's fall comes as investors try to come to grips with how big a threat the troubles in Turkey might pose for the currency union. The shared currency sank as much as 1.2 percent to the weakest in more than a year after a Financial Times report that the European Central Bank raised concern about the region's banks' exposure to Turkey.

Turkey's woes also shook world markets, pushing down stock indexes.

The Turkish currency has plunged to an all-time low amid concerns over the president's economies policies persisted and as a dispute with the United States showed no sign of subsiding. The currency has fallen 66 percent since the start of the year.

Washington has demanded the pastor's release and last month imposed financial sanctions on two Turkish ministers.

In the speech broadcast by state-owned TRT Channel, Erdogan called lira's tumble a "currency plot", noting that "those who move the currency think that they can destroy Turkey".

As a result of the U.S. sanctions, any property or interest in property of both Turkish ministers within USA jurisdiction is blocked, and United States persons are generally prohibited from engaging in transactions with them.

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