US tariff hike on Turkey fails to make economic sense

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US President Donald Trump says he has authorised the doubling of steel and aluminium tariffs "with respect to Turkey".

"Turkey expects other member countries to abide by worldwide rules", the ministry said in a statement, adding that it would support steel and aluminum exporters in all global platforms.

Trump and Secretary of State Mike Pompeo have repeatedly called for his release, while Erdogan has said the US should respect Turkey's judicial process.

The lira, which has always been falling on worries about the government's influence over monetary policy and the USA tensions, plunged more than 18 percent at one point on Friday to a record low against the dollar.

High level meetings in Washington between US and Turkish officials over a detained American pastor ended this week without an apparent resolution.

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

The new set of economic steps are aimed at securing an economic growth of 3-4 percent in 2019, and decreasing the inflation rate to single digits, the Ministry of Treasury and Finance said in a press release on August 9.

Trump tweeted he had authorized a 20 percent duty on aluminum and 50 percent one on steel. The U.S. imported about 4,500 tons of aluminum bars, rods and profiles from the country in 2017, according to World Bank statistics. "Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies", President Erdogan said. The lira fell further after Trump's tweet.

While there was no statement from the Turkish side, US State Department spokesperson Heather Nauert said wide-ranging conversations had been held.

Image Turkish President Recep Tayyip Erdogan in Bayburt
Tayyip Erdogan called on Turks to convert currency and gold into

Erdogan urged Turks to combat the lira's slide by selling any dollars they have stashed away - advice few Turks are likely to take since hard currency is their best insurance against soaring prices. Inflation increased 16 percent in July, and Erdogan has insisted that interest rates not increase.

Graham called Turkey's case against Brunson a "sham".

Noting that Turkey is moving away from North Atlantic Treaty Organisation allies and toward Russian Federation and Iran, Mahaffee said, "The clash of personalities between Trump and Erdogan might be more than enough to split the historic alliance".

In modern economies, central banks are meant to be independent of governments to make sure they set policies that are best for the economy, not politicians. But doubling tariffs on a supplier could force buyers to turn to other steel makers and, in turn, lift steel prices that have already ballooned in recent months.

"Nevertheless, we implore President Trump to return to the negotiating table - this can and should be resolved through dialogue and cooperation", he added. Turkey ranks seventh among all countries in steel exports to the United States market.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Hard currency debt issued by Turkish banks suffered similar falls.

After winning a June election with revamped powers, he tightened his control over the central bank and appointed his son-in-law Berat Albayrak to head a newly-empowered finance ministry.

"The price of the food that I buy increases day by day, the fuel that I put in my vehicle to distribute lunches is more expensive, but I can not raise my prices from one day to the next", she said. 'On some days, I end the day with a loss'.

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