Turkey hikes tariffs on USA products amid escalating tensions

Gladys Abbott
August 15, 2018

Turkey and the USA are now experiencing rocky relations following Washington's imposition of sanctions over the detention of American pastor Andrew Brunson, who is under house arrest in Turkey over terrorism charges. The currency's climb followed retaliatory tariffs by Ankara against USA goods including rice, coal and cars.

'The import duties were increased on some products, under the principle of reciprocity, in response to the US administration's deliberate attacks on our economy, ' Vice President Fuat Oktay wrote on Twitter.

Turkish lira plunged on concerns over the deepening rift between Washington and Ankara, hitting a record low of 7.24 against US dollar and weakening some 45 percent so far this year.

The rebound in the Turkish currency to stronger than 6.0 against the US dollar was driven by a banking watchdog's step to limit swap transactions and by hopes of improved relations with the European Union.

Erdogan said his country will boycott us -made electronic goods amid a diplomatic spat that has helped trigger a Turkish currency crisis.

Citing Wednesday's tariff hikes on imports of American goods, the spokesman said, "Turkey does not intend to engage in a trade war, but when it is under an economic siege, the country will take all necessary steps to repel those attacks in coordination with all relevant institutions, state bodies and business associations".

Erdogan doubled the tariffs on passenger cars to 120 per cent, on alcoholic drinks to 140 per cent and on leaf tobacco to 60 per cent.

Brunson, who has worked in Turkey for more than 20 years as the pastor of the Resurrection Church, was detained more than a year ago for an alleged connection to a failed coup against Turkish President Recep Tayyip Erdoğan in 2016.

"We will boycott USA electronic goods", Erdogan said in a televised speech, raising the stakes in a spat that has seen the Turkish lira plunge to record lows.

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Kalin called on the United States to respect legal process in Turkey in reference to the American pastor's continued detention. It was not clear when the court would consider the appeal.

Erdogan also said that the country could depend on Venus and Vestel, two of Turkey's domestic smartphone brands.

The political spat with Washington has added to pressure on Turkey's currency, the lira, which has plunged against the dollar. Erdogan accused the United States of conspiring against Turkey and said that the slide in its currency doesn't make any sense logically.

Mr Erdogan also renewed a call for Turks to convert their dollars into the Turkish lira, to help strengthen the country's currency which has lost 40% in value this year.

Turkey has agreed to buy S-400 surface-to-air missiles from Russian Federation, an unprecedented move by a North Atlantic Treaty Organisation member, which has raised objections from members of both parties of the U.S. Congress and the Trump administration.

"The most exposed country with respect to Turkish Lira is actually Italy, who are one of the largest trading partners and have significant ownership of a Turkish bank and Spain as well".

"We view the policy of sanctions as unlawful and illegitimate, driven mostly by a desire to dominate everywhere and in everything, dictate policies and call shots in global affairs", Lavrov said.

Russia, Brazil, Argentina, South Africa and Mexico have also seen their currencies fall over the last week.

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