Trump Doubles Tariffs On Steel, Aluminum From Turkey

A U.S. Air Force A-10 Thunderbolt II departs Incirlik Air Base Turkey Jan. 20 2018

A U.S. Air Force A-10 Thunderbolt II departs Incirlik Air Base Turkey Jan. 20 2018

In a tweet, Trump cited the decline in Turkish currency as justification for increasing tariffs to 50 percent on Turkish steel and 20 percent on Turkish aluminum.

"There are some big moves still in Turkey and Russian Federation that are preventing everyone from enjoying the summer", said Deutsche Bank strategists Jim Reid and Jeff Cai in their morning note.

The Financial Times added to concerns with a report that the European Central Bank was anxious about possible losses at eurozone banks operating in Turkey.

Trump decided in March to impose import duties of 25 percent on steel and 10 percent on aluminum imports from several countries, including Turkey.

USA sanctions against top Turkish government officials and unorthodox economic policies by Turkey's President Recep Tayyip Erdogan have spooked markets.

Waves from the crisis spread overseas, with investors selling off shares in European banks with large exposure to the Turkish economy.

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

Deepening investor concerns about Turkey's authoritarian trajectory under President Recep Tayyip Erdogan and the economic fallout have also weighed on the currency.

He repeated a line from his earlier speech in which he said: "If there is anyone among you who has gold, dollar, euros under your pillows, you should take it to banks and sell for liras". "This is a national, domestic battle", he told a crowd in the northeastern city of Bayburt, according to Reuters.

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The lira was buffeted by a diplomatic row between Ankara and Washington, with Turkish President Tayyip Erdogan's attempts to talk up the currency having exactly the opposite effect.

But President Erdogan brushed off any concerns during a speech in the northeastern city of Bayburt on Friday, saying: 'The dollar can not block our path.

But neither should global investors over-react, suggested Kenningham, noting that Turkey accounts for just one percent of the world economy, slightly less than the Netherlands, making it not much of a risk to the world economy, or even the eurozone.

Relations between the USA and Turkey have not been helped by Turkey jailing an American citizen for an alleged attempted coup in 2016. It is obvious how it will be done: "since the final decision-maker of all policies in the new regime is the president, the responsibility of regaining confidence is on his shoulders".

The reaction from global currency markets to the rift between two North Atlantic Treaty Organisation allies caused the euro to slump to a 13-month low and pushed the dollar to a one-year high. Hard currency debt issued by Turkish banks suffered similar falls.

The report said that the situation is not yet seen as "critical" but Spain's BBVA, Italy's UniCredit and France's BNP Paribas are regarded as particularly exposed.

Markets are anxious about a deepening fallout between Washington and Ankara over the detention of United States pastor Andrew Brunson on terror charges, as well as other issues. The plunge in the value of the currency coupled with an inflation rate of almost 16% could cause a lot of damage to Turkey's economy.

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.

"However, I say it once again from here".

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