Published: Sat, August 11, 2018
Markets | By Noel Gibbs

Trump Doubles Tariffs On Steel, Aluminum From Turkey

Trump Doubles Tariffs On Steel, Aluminum From Turkey

European and American bank stocks declined on concerns about their exposure to Turkey.

Belpointe Chief Strategist David Nelson on the potential global market impact from Turkey's financial crisis and the future of Tesla. Indeed, through Thursday, the Turkish lira had lost 32 percent of its value against the dollar just since the beginning of the year.

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.

Banks were among the biggest fallers after the Financial Times reported that the European Central Bank is concerned about the exposure of some of the euro area's biggest lenders to Turkey in light of the currency fall.

"In that sense, the Turkey situation can be a contagion not only in Europe but across emerging markets", Anderson said.

The U.S. media widely pointed to the current state of Turkish-American relations and the case of American pastor Andrew Brunson, who is under house arrest in Turkey over terrorism charges.

Turkey exported $1.04 billion (€0.91 billion) worth of steel and $60 billion worth of aluminum to the USA in 2017, according to the Hurriyet newspaper. The White House said he had authorized them under a section of USA trade law that allows for tariffs on national security grounds.

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"Turkey expects other member countries to abide by worldwide rules", the country's trade ministry said in a statement.

The Treasury Department targeted Turkey's justice and interior ministers with financial sanctions last month after the government refused to allow Brunson to return to the U.S.

Analysts suggest Erdogan could have Washington in mind, given Ankara is demanding the extradition of US -based Turkish cleric Fethullah Gulen, who is blamed for masterminding the botched 2016 military takeover. It fell yet further to 6.2 to the dollar at 1254 GMT, almost 12 percent weaker on the day.

Marcus Chenevix, Middle East analyst at TS Lombard said that Turkey's economy is fragile.

On Friday, Erdogan asked Turkish citizens to sell off their gold and dollars and exchange them for the lira, in an attempt to prop up the currency.

Turkish newspaper Hurriyet and other media reports quote Erdogan as making the comment to a group of worshippers following traditional Muslim Friday prayers during a visit to the northern city of Bayburt.

The Turkish president took aim at the United States in his address, claiming "some countries have engaged in behaviour that protects coup plotters and knows no laws or justice". "This will be my nation's response to those who have declared an economic war", Erdogan said during the rally. "Don't heed them", Erdogan said (via CNBC).

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Then there are Turkey's worsening relations with the US. "I am afraid there will be a bank run in Turkey, people rushing to withdraw their deposits".

Trump announced the action Friday on Twitter.

At many USA lenders, "their exposure to any of these countries is fairly minimal", said Marty Mosby, an analyst at Vining Sparks.

In a tweet, he said he was imposing duties of 20 per cent on Turkish aluminium and 50 per cent on steel.

"I'm not aware of any prior administration using tariffs in this way, and there's a very simple reason: because they're an incredibly blunt instrument that often can have blowback on American workers and consumers as we've seen in the China context", said Ned Price, a former Central Intelligence Agency officer who also served as a National Security Council spokesman during the Obama administration.

Turkish President Recep Tayyip Erdogan said in a speech that the drop was part of a "campaign" led by foreign powers. "But if the United States can't handle relations with Turkey ... then a further deepening of relations with Moscow is an option". Gulen denies the allegation.

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