Trump's decision to double tariffs on Turkey 'brutal'

Erdogan warns of campaign against Turkey as lira plummets

Turkey's exceptionally large current account deficit makes the country's potential to fall into a severe debt crisis even greater.

On Monday, the Turkish lira suffered its most significant drop in a decade following reports the Trump administration was considering ending Turkey's duty-free access to the USA market.

The White House said later that Trump had authorised his administration to prepare documents imposing the increased duties under a section of USA law that allows for tariffs on national security grounds. His comments did nothing to shore up the lira currency.

President Recep Tayyip Erdogan is urging the Turkish people to exchange gold and hard currency into lira, after the currency hit a record low against the dollar today.

The accelerated lira sell-off also deepened concerns about the exposure of banks to Turkey, particularly whether highly indebted companies would be able to pay back loans taken out in dollars and euros after years of overseas borrowing to fund a construction boom under Turkish President Tayyip Erdogan.

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

Trump said via a tweet that the tariff on aluminium imports will be increased to 20 per cent and the tariff on steel imports will be raised to 50 per cent as the Turkish Lira "slides rapidly downward against our very strong Dollar!"

Cornell University economist Eswar Prasad told the New York Times Friday that Trump's announcement sets "a worrying precedent for future trade sanctions that could be triggered by purely market-driven changes in exchange rates ..."

"For some time now investors have been looking at the unfolding currency crisis in Turkey as a local difficulty", noted CMC Markets UK analyst Michael Hewson.

Washington imposed the metals tariffs on national security grounds, claiming the glut of steel and aluminum harmed USA companies and the economy.

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"Our relations with Turkey are not good at this time!" he said in an early morning post.

State Department Spokesperson Heather Nauert told reporters on August 9 that the United States would define progress in relations with Turkey with Brunson's return to the United States.

Ankara blames for an attempted coup in 2016.

The tweet is another salvo in the growing dispute between Turkey and the U.S.

Experts, however, were split about Mr Trump's tariffs decision with some fearing it could backfire on US-Turkish relations without helping Mr Brunson's case.

The Trump administration has called upon Erdoğan to release Brunson for months.

Just weeks ago, Trump was reported to have fist-bumped Erdogan during a North Atlantic Treaty Organisation meeting in Brussels.

It is possible that Trump cited the lira's decline as a mere pretense for pressuring Turkey to release the American pastor.

"We are in uncharted waters here". High level meetings in Washington between US and Turkish officials ended this week without an apparent resolution. Trade issues and differences over Syria have also strained bilateral ties.

Speaking to supporters in the Black Sea province of Rize late on Thursday, Erdogan again spoke of campaigns against Turkey. Gulen denies the allegation.

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