Published: Sat, August 11, 2018
Finance | By Marshall Campbell

Trump's new tariffs on Turkey are actually benefiting Russian Federation

Trump's new tariffs on Turkey are actually benefiting Russian Federation

President Donald Trump said Friday he has green-lit a doubling of steel and aluminum tariffs on Turkey and warned that relations between the United States and Turkey "are not good at this time", a move that comes amid U.S. efforts to increase pressure on Ankara to secure the release of an American pastor.

President Donald Trump said on Friday that he has authorised the doubling of steel and aluminium tariffs "with respect to Turkey".

The White House said Mr Trump had authorised them under a section of USA trade law that allows for tariffs on national security grounds.

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

President Donald Trump announced tariff increases on Turkish metals as tensions between Turkey and the United States escalated.

But analysts say that while there may be losses at some banks, Turkey's economic problems do not pose a big threat to Europe or other big economies like the United States. On Friday, Trump announced he would double aluminum and steel tariffs on the North Atlantic Treaty Organisation ally.

The Turkish lira hit a record low on Friday before Mr Trump's tweet, which also said "our relations with Turkey are not good at this time!".

Garanti and its local peers face a wave of corporate defaults and loan restructurings as the lira's collapse makes it harder for Turkish companies to repay the dollars they have borrowed in recent years.

A plunge in the Turkish lira rocked global equities and emerging markets on Friday and fear of more turmoil sent investors scurrying for safety in assets like the yen and US government bonds.

The meetings came as Turkey seeks to stanch an economic meltdown amid fallout from USA sanctions imposed last week over the continued detention of the pastor, Andrew Brunson, who was jailed on espionage and terrorism suspicions more than two years ago and recently released to house arrest.

Despite Trump's insistence, Turkey has not budged in freeing American pastor Andrew Brunson, who has been detained by Turkey for nearly two years on charges that he was working with a terrorist organization and was a spy. Trump and Vice President Mike Pence threatened on July 26 to impose sanctions on Turkey if the pastor is not set free and allowed to return to the United States.

Trump going ahead with tariffs on $16B in Chinese imports
The US is now considering tariffs on another $200bn in goods , including consumer products that were spared in the initial round. Chinese data on Wednesday showed exports to the USA rose 13.3% in July to $41.5 billion against a year ago.

The stock market has also fallen 17%, while government borrowing costs have risen to 18% a year, according to Andrew Walker, the BBC World Service economics correspondent.

"There is zero credibility in the Central Bank of Turkey and zero credibility in Turkish policy making". On Friday morning, he told his followers in the remote eastern province of Bayburt that "the dollar or anything like it will not be able to stop us going on our way".

Russia struck back Friday, with Prime Minister Dmitry Medvedev saying that any move to rein in Russian banks or their foreign-currency dealings would be "economic war".

Erdogan urged Washington to give up the misguided notion that bilateral relations could be "asymmetrical" and realise that Turkey had alternatives "before it is too late". As recently as April the ratio was about four lira per dollar.

Washington this month imposed sanctions on senior Turkish officials, angering President Recep Tayyip Erdogan and prompting retaliatory measures by Ankara.

The Turkish president on Friday dismissed such concerns and called for people to defend the currency.

Indeed, through Thursday, the Turkish lira had lost 32 percent of its value against the dollar just since the beginning of the year.

The Lira touched a historic low versus the U.S dollar. "If they have their dollar, we have the people, we have Allah".

On Friday, the euro sagged to a 13-month low against the dollar, down 0.7 per cent to $1.1450, after the Financial Times reported that the European Central Bank was anxious about possible losses at eurozone banks operating in Turkey.

Investors piled into "safe" government debt, with German yields hitting three-week lows and the yield on the benchmark USA 10-year Treasury note falling to 2.88822 percent.

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