Trump's tariff tweet inflames Turkey's economic crisis and strained USA relations

Trump's tariff tweet inflames Turkey's economic crisis and strained USA relations

"If they [U.S. manufacturers] are importing from Turkey and they rely on them, then tariffs are going to make it more expensive for them by raising their own costs", said William Jackson, chief emerging markets economist at London-based Capital Economics.

The lira, he noted on Twitter, "slides rapidly downward against our very strong Dollar!"

"Aluminum will now be 20 percent and Steel 50 percent".

The euro zone bank sell-off was also exacerbated by a report in the Financial Times that the European Central Bank is increasingly concerned about some lenders, particularly BBVA of Spain, UniCredit of Italy and BNP Paribas of France as they have some of the largest operations in Turkey among euro zone banks.

The Turkish lira plunged on Friday, raising questions about the country's financial stability, as investors anxious about the president's unorthodox economic policies and a dispute with the United States that has led to sanctions.

President Tayyip Erdogan told Turks to exchange gold and hard currency into lira on Friday, framing Turkey's currency crisis as a "national battle" against economic enemies.

"If you have dollars, euros or gold under your pillow, go to banks to exchange them for Turkish lira".

The lira tumbled 13% in one day, to 6.51 per United States dollar, a massive move for a currency that will make the Turkish poorer and further shake worldwide investors' confidence in the country.

Although Erdogan struck a defiant tone and warned of "economic war", his foreign ministry called for diplomacy and dialogue to solve problems with Washington and Trade Minister Ruhsar Pekcan said "we implore President Trump to return to the negotiating table".

Turkey remains at loggerheads with the United States in one of the worst spats between the two North Atlantic Treaty Organisation allies in years over the detention for the last two years of American pastor Andrew Brunson and a host of other issues.

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The lira has lost around 20% of its value in the last 24 hours.

The Turkish delegation met with the State Department's No. 2 official, John Sullivan, on Wednesday to address friction between the North Atlantic Treaty Organisation allies. A delegation of Turkish officials held talks with their counterparts in Washington this week but there is no sign of a breakthrough.

Turkey's treasury and finance minister Berat Albayrak - who is Mr Erdogan's son-in-law - tried to ease investor concerns during a conference, saying the government would safeguard the independence of the central bank. "But if the United States can't handle relations with Turkey ... then a further deepening of relations with Moscow is an option".

But President Erdogan brushed off any concerns during a speech in the northeastern city of Bayburt on Friday, saying: 'The dollar can not block our path.

In an opinion piece in the New York Times on Friday, Erdogan said Turkey's partnership with the United States could be in jeopardy unless Washington "starts respecting Turkey's sovereignty".

He railed against "those waging economic war" against Turkey. Conservative evangelical Protestants are a key constituency at home for U.S. President Donald Trump.

The move could affect $1.7 billion of Turkish exports.

For a start, investors are anxious that Turkish companies that borrowed heavily to profit from a construction boom may struggle to repay loans in dollars and euros, as the weakened lira means there is now more to pay back.

The Turkish lira dropped as much as 18 per cent at one point after Mr Trump's announcement - the biggest one-day fall since a 2001 financial crisis in the country.

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