US president Donald Trump. Picture: REUTERS
US president Donald Trump. Picture: REUTERS

Washington — US President Donald Trump said he’s authorised doubling some metals tariffs on Turkey, citing poor relations with the Nato ally amid an escalating conflict over its detention of an American pastor.

"I have just authorised 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! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!" Trump tweeted.

Trump’s tariff decision followed a defiantly nationalist speech Friday by Turkish President Recep Tayyip Erdogan in which he vowed that his country wouldn’t bow to "economic warfare" and urged the people of Turkey to sell their foreign-exchange reserves. Erdogan was to speak for a second time on Friday, shortly after Trump posted the tweet.

A US deadline for Turkey to release Pastor Andrew Brunson lapsed less than two days ago, according to an administration official with knowledge of the ultimatum. The deadline — which had been set for 6pm on August 8 — came just hours after Turkish officials met with counterparts at the US state and treasury departments to try to resolve the dispute.

On Friday morning, the lira posted its worst weekly decline since 2008, raising the prospect of political upheaval in a nation with a key role in several of the world’s biggest challenges. Shares of the bank Türkiye Is Bankasi fell 8.7%, more than any full-day drop since 2013. The lira has now passed Argentina’s peso as the worst performing currency of 2018, according to Bloomberg data.

The rout reverberated across global markets as Turkey’s economic crisis threatened to spread. The S&P 500 Index erased a weekly advance; European and emerging-market equities slid more than 1% and the 10-year US treasury yield slid to 2.90%.

Turkey is seeking to stanch an economic meltdown amid fallout from US sanctions imposed last week over the continued detention of Brunson, who was jailed on espionage and terrorism suspicions more than two years ago and recently released to house arrest.

The US was the fourth largest trading partner of Turkey last year with $21bn in commerce, behind Germany, China and Russia. Shares of Turkish steel makers Kardemir Karabuk Demir Celik Sanayi ve Ticaret and Eregli Demir ve Celik Fabrikalari TAS plunged as much as 8% and 9.9%, respectively, after Trump’s tweet.

Steel was Turkey’s fourth-largest export last year, valued at $11.5bn and accounting for about 7% of total exports, according to the country’s Steel Exporters’ Association. Turkey is ranked the world’s sixth-biggest steel producer. While the US was the top destination for Turkish steel exports last year, it tumbled to third place in the first half of this year as earlier tariffs diminished the trade.

The move against Erdogan’s government also highlights the disconnect between Turkey and the US as they fail to negotiate their way out of an array of conflicts. Relations used to be based on strategic interests, but more recently they’ve been dominated by discord over alliances in Syria’s civil war, Ankara’s strengthening ties with Moscow, and its uneasy position within Nato.

Turkey has been a key ally in the fight against Islamist terrorism in Iraq and Syria, and the US base in Incirlik is an important staging area. White House officials didn’t immediately respond to requests for additional information.

Trump is working "diligently" to bring Brunson home, the president’s lawyer Jay Sekulow said earlier on Fox News. Vice-president Mike Pence and secretary of state Mike Pompeo are also involved in that effort, he said. Turkey’s recent decision to move Brunson to house arrest was a welcome decision but not enough, Sekulow told the station in an interview.

With assistance from Adveith Nair, Tugce Ozsoy, Nick Wadhams, Justin Sink and Thomas Biesheuvel

Bloomberg

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