Friday, 17 August, 2018

Trump doubles tariffs on steel, aluminum from Turkey

Turkish US talks end at State Department Erdogan says attempts to exert economic pressure on Turkey futile
Ginger Lawrence | 10 August, 2018, 20:57

President Trump said Friday the USA will double tariffs on steel and aluminum for Turkey, noting the relationship between the two states "are not good at this time!"

President Tayyip Erdogan told Turks to exchange gold and dollars into lira as the currency tumbled after President Donald Trump doubled USA tariffs on metals imports from Turkey.

Trump tweeted that he had authorized the doubling of steel and aluminum tariffs "with respect to Turkey". Trump's tweet Friday showed that in many cases, the political and economic factors overlap - Trump's decision to double sanctions on Turkey was made possible by a key trade law called Section 232 that gives the USA president very broad powers over tariffs in cases of national security.

The Turkish lira has lost 13 per cent of its value against the dollar since midnight, pushing the battered currency further into crisis.

Ankara and Washington have been at loggerheads over the detention of Brunson on terrorism charges, earlier prompting USA sanctions against two of Erdogan's ministers and threats of trade restrictions.

President Trump and Turkish President Recep Tayyip Erdogan appear in the Roosevelt Room of the White House on May 16, 2017.

Erdogan's characteristic defiance in the face of the crisis has further unnerved investors.

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Turkish President Tayyip Erdogan addresses his supporters in Bayburt, Turkey August 10, 2018. "This is a domestic and national struggle", Erdogan said according to CNBC.

"The dollar can not block our path".

"This will be my people's answer to those who declare economic war against us", he added. Such relentless depreciation drives up the cost of imported goods from fuel to food for ordinary Turks.

"Confidence needs to be regained".

"People looking at things this morning are much more aware that there is central (major) contagion risk", said David Owen, chief European economist at Jeffries in London. As the currency drops, Turkish companies and households with debt in foreign currencies see their debts expand. "Albayrak's plan was uninspiring at best". He is a self described "enemy of interest rates" and wants banks to lend cheap credit to fuel growth, something experts are anxious could seriously affect the economy.

Erdogan after winning June 24 elections with revamped powers tightened his control over the central bank and appointed his son-in-law Berat Albayrak to head a newly empowered finance ministry.

Independent analysts argue the central bank should instead raise rates to tame inflation and support the currency.