White House Doubles Tariffs on Turkey
- Lira extends this year’s declinet to 70.0%
- Turkey’s President Recep Tayyip Erdogan called on Turkish citizens to trade their Gold and/or USDs for the lira as the country wages a “national battle.
- USD/TRY: +16.18% to 6.442
Sharp drop in the Turkish lira amid threats of US sanctions shakes the markets
US President Donald Trump said Friday he had authorized the 2Xing of tariffs on imports from Turkey, imposing a 20% duty on aluminum and 50% one on steel, as tensions mount between the two NATO allies over Ankara’s imprisonment of an evangelical pastor and other diplomatic issues.
“I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar!” President Trump said in an early morning post on Twitter. “Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!”
The lira fell as much as 18% Vs USD in its worst day since Turkey’s financial crisis of Y 2001. The plunge followed a deepening rift with the United States, worries about its own economy and lack of action from policymakers.
President Tayyip Erdogan told Turks to swap Gold and Dollars into lira as the currency tumbled after President Donald Trump 2X’d US tariffs on metals imports from Turkey.
Turkey later warned the United States that sanctions and pressure would only serve to harm ties between the two NATO allies, adding Ankara would continue to retaliate as necessary against US tariffs.
Bank shares across Europe fell and the EUR slipped to its lowest since July 2017 as European Central Bank was concerned about European lenders’ exposure to Turkey. The country is not a member of the EU but is economically linked to it.
The USD 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.
The turmoil has made it difficult for global investors to justify remaining in Europe and is negative for emerging markets.