Trump doubles tariffs on Turkey, stoking jitters

Air Force Boeing KC-135R Stratotanker as it touches down on the flight line at the Incirlik Air Base in Turkey

Air Force Boeing KC-135R Stratotanker as it touches down on the flight line at the Incirlik Air Base in Turkey

Trump wrote on Twitter.

U.S. President Donald Trump said he's authorized doubling some metals tariffs on Turkey, citing poor relations with the North Atlantic Treaty Organisation ally amid an escalating conflict over its detention of an American pastor.

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

This comes as the Trump administration plans to slap a 20-percent tariff on aluminum and a 50-percent tariff on steel.

Saying Friday Turkey faced "an economic war", Turkish President Recep Tayyip Erdogan urged citizens to support the lira by exchanging foreign money for the local currency.

Investors piled into "safe" government debt, with German yields hitting three-week lows and the yield on the benchmark US 10-year Treasury note falling to 2.88822 percent.

Erdogan, who says a shadowy "interest rate lobby" and Western credit ratings agencies are attempting to undermine Turkey's economy, said Turks should exchange their gold and dollars into lira to help the currency.

'This is a national, domestic battle.

One of the triggers of the turmoil has been a standoff with the USA over a detained American pastor that Turkey, a North Atlantic Treaty Organisation ally, has put on trial for espionage and terror-related charges linked to a failed coup attempt in the country two years ago.

That turned into a rout on Friday, with the lira diving as much as 18 percent at one point, the biggest one-day drop since Turkey's 2001 financial crisis.

Turkish newspaper Hurriyet and other media reports quote Erdogan as making the comment to a group of worshippers following traditional Muslim Friday prayers during a visit to the northern city of Bayburt.

The US dollar surged to new 2018 highs in the early hours of Friday morning on a mixture of concerns over the currency situation in Turkey, consistent expectations on the performance of the US economy and the outlook that the United States should be better prepared to handle the negative headwinds from a trade war, in comparison to those economies that it targets.

The Turkish lira hit a record low of 6.24 per dollar on Friday, before recovering to 5.92 _ still down a whopping 7 per cent on the day.

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

The president has declared that American importers' reliance on foreign metals poses a national security risk to the United States, and he also has increased the cost of these imports on Japan, Turkey and members of the European Union, the paper reported.

"In most cases though, we suspect that this resilience will prove temporary", they said, highlighting expectations of rising USA interest rates and worries over growing USA protectionism. The lira fell further after Mr Trump's tweet.

His finance minister later promised that the central bank would remain independent and that inflation would come down.

UBS chief economist for EMEA emerging markets Gyorgy Kovacs said a giant rate hike of 350-400 basis points would be "consistent with real rate levels that in the past helped to stabilise the currency" but warned a deal to normalise ties with the USA may also be needed.

Meanwhile, investors are anxious about the economic policies of President Recep Tayyip Erdogan, who won a new term in office in June with sweeping new powers. Inflation increased 16 percent in July, and Erdogan has insisted that interest rates not increase.

As you can imagine, more people are reading The Jerusalem Post than ever before. "On some days, I end the day with a loss".

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