Trump doubles tariffs on Turkish steel and aluminum, says relations 'not good'

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His comments did nothing to shore up the lira currency.

Turkey's currency sank to record lows on Friday amid panic about the country's economic health and souring relations with the United States.

One of the triggers of the turmoil has been a standoff with the US over detained American pastor Andrew Brunson.

Shares of Turkish steelmakers Kardemir Karabuk Demir Celik Sanayi ve Ticaret AS and Eregli Demir ve Celik Fabrikalari TAS plunged as much as 8 per cent and 9.9 per cent, respectively, after Trump's tweet.

U.S. President Donald Trump said Friday he had authorized the doubling of steel and aluminum tariffs with respect to Turkey, as tensions mount between the two North Atlantic Treaty Organisation allies. As recently as April the ratio was about four lira per dollar.

After inconclusive talks this week on solving the spat, Trump took advantage of Turkey's turmoil on Friday to turn the screws on the country.

The mere fact that the USA would impose sanctions on Turkey - a stalwart North Atlantic Treaty Organisation ally for decades during the Cold War - has increased uncertainty about the future in Turkey.

Economist Chad Bown, who specializes in trade issues, said Turkey accounted for just over four percent of U.S. steel imports in 2017, but a very small fraction of the aluminum brought into the country.

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The United States imposed sanctions on two Turkish officials earlier this month over a detained American pastor who is being tried on espionage and terror-related charges.

Hoping to put pressure on the North Atlantic Treaty Organisation ally to free the pastor, the White House sanctioned two top Turkish government officials.

His characteristic defiance has further unnerved investors.

In what appears to be a diplomatic riposte, Turkey later said Erdogan had held a phone call with Russian President Vladimir Putin to discuss economic ties.

"If you have dollars, euros or gold under your pillow, go to banks to exchange them for Turkish lira".

"This is a domestic and national struggle".

"Some countries have engaged in behavior that protects coup plotters and knows no laws or justice", he said.

He added: "Relations with countries who behave like this have reached a point beyond salvaging". Gulen denies the allegation.

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On August 1 Washington announced sanctions against Turkey's justice and interior ministers, prohibiting United States entities and citizens from doing business with them, after threatening to impose "large sanctions" if Ankara failed to free Brunson. "This crisis is created by America", said Serap, a 23-year-old clerk at a clothes store in central Istanbul.

"In that sense, the Turkey situation can be a contagion not only in Europe but across emerging markets", Anderson said.

"Confidence needs to be regained".

"The basic reason the exchange rate has gone off the rails is that confidence in the management of the economy has disappeared both domestically and overseas", said Seyfettin Gursel, a prominent economist and a professor at Turkey's Bahcesehir University.

The lira was trading at 5.95 to the dollar, a loss on the day of 7.5 percent.

New Finance Minister Berat Albayrak - Mr Erdogan's son-in-law -acknowledged that the central bank's independence was critical for the economy, promising stronger budget discipline and a priority on structural reforms.

This did nothing to revive the lira. It was almost 6 per dollar early Friday morning in D.C. "Albayrak's plan was uninspiring at best".

Erdogan, a self-described "enemy of interest rates", wants banks to lend cheap credit to fuel growth, but investors fear the economy is overheating and could be due for a hard landing.

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