Donald Trump Authorizes More Steel and Aluminum Tariffs on Turkey

  • Donald Trump Authorizes More Steel and Aluminum Tariffs on Turkey

Donald Trump Authorizes More Steel and Aluminum Tariffs on Turkey

Trump and Vice President Mike Pence threatened on July 26 to impose sanctions on Turkey if the pastor is not set free and allowed to return to the United States.

President Donald Trump upped the pressure on Friday, saying in a tweet that he has authorized a doubling of USA tariffs on Turkish steel and aluminum imports, to 50 percent and 20 percent, respectively. Trump said on Twitter. "Our relations with Turkey are not good at this time!" he added.

The lira has always been falling on worries about Mr Erdogan's influence over monetary policy and worsening relations with the United States.

"Aluminum will now be 20% and Steel 50%".

A favourable exchange rate though can't have harmed the situation: on Friday, the USA dollar would buy nearly six Turkish lira; at the end of January, it would have got you less than four.

Fears of contagion from the Turkish lira meltdown sparked a rout on European markets as president Recep Tayyip Erdogan refused to bow to investor pressure.

Treasury and Finance Minister Berat Albayrak - who is Erdogan's son-in-law - was scheduled later on Friday to outline a "new economic model".

Shares in France's BNP Paribas, Italy's UniCredit and Spain's BBVA, the banks seen as most exposed to Turkey, fell 4 per cent or more.

Exchange-rate volatility not only complicates loan repayments, it also drives inflation higher and erodes the value of existing loans in the local currency.

This prompted yet another tweet from President Trump, this time announcing the actual authorization of the doubling of tariffs on steel and aluminum for Turkey.

Trump's announcement saw the Turkish lira drop even further, crashing to a 19 percent daily loss against the greenback. The Lira has lost almost a third of its value this year, as relations with the United States have become increasingly strained. The currency has fallen 66 percent since the start of the year. But experts argue that the central bank should instead raise interest rates to ease inflation and to support the currency. The White House said he had authorized them under asection of US trade law that allows for tariffs on nationalsecurity grounds.

"My guess is you're going to get people cutting estimates, if we get bad volatility here on the capital markets front", said Charles Peabody, a bank analyst at Portales Partners.

The dollar rose as exposure to Turkey could impact European banks and spark a domino effect as people begin to pull out of those banks and into US assets, said Gregan Anderson, macroeconomic strategist at brokerage Bulltick LLC. The tech-heavy Nasdaq composite was down 83 points, or 1.1%, poised to end an eight-day winning streak.

"Our relations with Turkey are not good at this time!" hewrote".

Such factors could lead regulators to ask a bank like UniCredit - which is exposed to both Turkey and Russian Federation - to set aside more capital against those risks, Credit Suisse Group AG analysts led by Carlo Tommaselli said in a note.

He continued: "A painful admittance that his powers are outmatched by the forces of markets and that he may have misjudged the economic situation may be a lot to ask of the autocratic leader Erdogan, but the alternative is that the lira will meet the ground at terminal velocity; an impact that will damage the Turkish economy for years to come".