Trump's announcement doubling tariffs on Turkey comes after failure to free American pastor
12 August, 2018, 16:58
Turkish President Tayyip Erdogan talks to media in the Black Sea city of Ordu, Turkey August 11, 2018.
He said: "It is wrong to dare bring Turkey to its knees through threats over a pastor". Trump, who had secured the release of a Turkish woman activist being held by Israel and just days earlier he had been exchanging fist bumps with Erdogan at a North Atlantic Treaty Organisation summit in Brussels, took it as a personal affront.
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. On Friday, he said the country had to take steps in answer "to those who have waged an economic war against us".
The White House cited national security grounds as the means by which Mr Trump had authorised a 50% steel tariff and 20% aluminium tariff on Turkey.
Looking at early signs of stress in the banks' dollar bond yields, he concluded: "One possibility is that investors have become concerned that U.S. sanctions could expand to include the banking sector, adding a premium to the yield on Turkish banks' bonds".
Erdogan said Turkey is not afraid of outside "threats".
"President Erdogan's strengthened powers under the new presidential system have made it increasingly uncertain whether policymakers will be able to act to stabilize the economy", William Jackson, the chief emerging markets economist at Capital Economics in London, said.
"Because this is the language they understand".
Turkey said it would respond to the new USA tariff action "without delay" and warned the move would further harm relations between the two countries.
Markets InsiderAs a result of the ensuing panic, the dollar strengthened sharply against major currencies as global investors sought a safe-haven, something that runs directly against Trump's professed efforts to boost USA manufacturing production and exports. I am calling on those in America again.
The currency, which traded 4.7 to the dollar a month ago, has now weakened to 6.4 to the dollar, having lost more than 30% of its value this month, 20% of which accrued in the last 24 hours.
"There is zero credibility in the Central Bank of Turkey and zero credibility in Turkish policy making".
"Before it is too late, Washington must give up the misguided notion that our relationship can be asymmetrical and come to terms with the fact that Turkey has alternatives", he said.
This came in the wake of sanctions imposed by Mr Trump for Turkey's refusal to free pastor Andrew Brunson, who the nation detained on terror charges despite the insistence of the United States he is innocent. Meanwhile, the Iranian Foreign Ministry Spokesman Ghasemi underlined on Saturday that Iran supports Turkey in the face of United States sanctions on Ankara.
Turkey's currency crisis spilled loudly on to the global stage Friday as other markets, including U.S. stocks, took at hit from concern about financial contagion to other countries and banks.
The external value of the lira is not a prime concern of Erdogan's core supporters, many of whom have no plans for foreign holidays and readily accept government rhetoric that economic problems are caused by outsiders seeking to weaken Turkey.