Donald Trump Authorizes More Steel and Aluminum Tariffs on Turkey

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A "gigantic rate hike" of at least 500 basis points to calm markets and a clear commitment from the Central Bank of Turkey to support the currency could help halt the decline, Hordijk said, adding, "Another bandage to stop the lira from bleeding to death would be capital controls, but Erdogan opposes these measures".

Turkey, you see, has hurt itself with bad policies, tried to blame foreigners for this fact, but then, unbelievably, seen Trump seem to vindicate their scapegoating by trying to bring their economy down in retaliation for them bringing it down themselves. The central bank noted that Spain's BBVA, Italy's UniCredit and France's BNP Paribas all have significant exposure to Turkish debt and that a crashing lira could affect repayment of foreign currency loans.

Trump struck a vengeful note, announcing, "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 our very strong Dollar!"

"As he stated, the President has authorized the preparation of documents to raise tariffs on imports of steel and aluminum from Turkey".

The lira hit a record low of 6.24 per dollar on Friday, before recovering to 5.96, down more than 7 per cent on the day.

President Tayyip Erdogan told Turks to exchange gold and dollars into lira as the currency tumbled after President Donald Trump doubled US tariffs on metals imports from Turkey. The currency has fallen 66 per cent since the start of the year, pushing up the cost of goods for Turkish people and shaking worldwide investors' confidence in the country.

Erdogan spoke briefly Thursday night and alluded to problems with the currency, saying "various campaigns" were underway, adding: "If they have dollars, we have our people, our righteousness and our God".

Mr Brunson was moved to house arrest in July after spending nearly 20 months in a Turkish jail.

"We will not lose the economic war", he said.

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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 ..." Inflation increased 16 percent in July, and Erdogan has insisted that interest rates not increase.

The new duties on Turkey are double the level that Trumpimposed in March on steel and aluminum imports from a range ofcountries.

The prospect of a deal for Brunson's release appeared high as Turkish officials traveled to Washington this week, but the deal apparently fell apart over last-minute Turkish demands.

The lira stumbled even more as Erdogan delivered a wild speech to supporters about the plunging currency, encouraging Turks to buy it up. US stocks were also rattled, with banks again in focus.

Investors are concerned with Erdogan's firm grip on Turkish monetary policy.

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

'This is a national, domestic battle.

New Finance Minister Berat Albayrak - Erdogan's son-in-law - rolled out the government's new economic plan on Friday, promising central bank independence and tighter budget discipline, but giving few details to reassure investors.

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