ANKARA: While Turkey endures one of the worst currency crises in its history, with the lira hitting record lows, US President Donald Trump on Friday announced a doubling of tariffs on imported steel and aluminum from Turkey.
The announcement is the latest escalation in a diplomatic spat over the detention in Turkey of an American pastor, Andrew Brunson, on espionage and terror-related charges. Talks between Turkish and US authorities collapsed on Thursday.
“I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish lira, slides rapidly downward against our very strong Dollar!” Trump tweeted.
“Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!”
Turkey is the eighth-largest steel producer in the world and the sixth-largest steel exporter to the US. Turkish steel exports to the US stood at $1.1 billion last year.
Turkish President Recep Tayyip Erdogan told worshippers after Friday prayers that the country “will not lose the economic war” with the West.
“They say things like foreign exchange rates. Get over it. We will keep growing despite attacks,” he added.
“No one can push the Turkish people… with fines, threats or sanctions. Solving this problem (over Brunson) is only possible through calm negotiations and diplomacy.”
Turkish businesses that operate based on foreign currencies are expected to be hit hard by the weakening lira.
The Istanbul Chamber of Industry urged the government on Friday to take “urgent” measures.
Some experts say mismanagement of macroeconomic challenges, weak monetary policy, high inflation and expansionary fiscal policies are the biggest problems facing Turkey’s economy.
Ozgur Unluhisarcikli, Ankara director of the German Marshall Fund of the US, said Trump’s tweet reaffirmed his administration’s determination to go to great lengths to free Brunson, in a way that will hurt Erdogan’s proud image. “We have a rhetorical question in Turkey: ‘Do you want to eat grapes or do you want to beat up the winegrower?’ In this case, Trump doesn’t sound like it’s grapes he’s after,” Unluhisarcikli told Arab News.
Some experts say to address its larger economic problems, Turkey may have to resort to the International Monetary Fund (IMF).
Howard Eissenstat, a Turkey expert at St. Lawrence University and senior non-resident fellow at the Project on Middle East Democracy, said two issues have become intertwined.
“The first is the crisis with the US, which has come to a head in the past few weeks. The second is the broader economic crisis in Turkey, which has been developing over many years,” he told Arab News.
The spat with the US has clearly exacerbated the larger economic crisis, but resolving the former will not fix the latter, Eissenstat said.
“On the other hand, allowing the US crisis to spin out of control will clearly make the broader issues more acute,” he added.
“The US wants to keep Turkey as an ally, but at this point Turkey will have to take aggressive action to alleviate US concerns, which have been festering for a long time,” he said.
“It’s possible that Erdogan will do so; he has reversed himself in the past. But I don’t expect him to do so, at least in the short term,” Eissenstat added.
“This spat has become too public and too wrapped up with Erdogan’s deeply felt belief that the US is trying to undermine him.”