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Relations with Turkey are not good!

11 August 2018

A diplomatic tussle between the USA and its North Atlantic Treaty Organisation ally deepened Friday after President Donald Trump said he had authorized the doubling of tariffs on Turkish steel and aluminum.

I have just authorised a doubling of tariffs on steel and aluminium with respect to Turkey as their currency, the Turkish lira, slides rapidly downward against our very strong dollar!

But the trade minister, Ruhsar Pekcan, said: "We implore President Trump to return to the negotiating table". Import taxes for aluminum will be 20 percent.

In his tweet about the new tariffs, Trump said "Our relations with Turkey are not good at this time!".

Since then, its relationship with Turkey, the sixth largest steel importer to the United States, has deteriorated, prompting Ankara to send a delegation this week to Washington to meet with both the State and Treasury Departments.

President Recep Tayyip Erdogan said that Turkey was at economic war, as the country's currency tumbled as much as 20 percent to a record low.

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"Those who have dollars, euros or gold under their pillows should go and exchange them into [Turkish] lira".

The Turkish lira suffered its worst one-day loss in a decade Friday after President Donald Trump announced that the United States would hike tariffs, prompting investor confidence to slump.

"Erdogan's aim is to improve the economic position of households", she said, adding the government wanted to "keep the music playing" even as external and internal imbalances grow.

Without naming countries, Erdogan said supporters of a failed military coup two years ago, which Ankara says was organized by a USA -based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago to a new executive presidency.

The drop in the lira has put increasing pressure on Turkish banks, given many companies have borrowed heavily in foreign currency.

Mr Trump has castigated Turkey for detaining American pastor Andrew Brunson, who is on trial for terrorism charges for allegedly associating with plotters of the failed 2016 coup against Mr Erdogan.

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Some US officials say Turkey is holding Brunson as a bargaining chip after an executive at Turkey's state-owned Halkbank was convicted and imprisoned in the United States in May for helping Iran evade US sanctions.

Meanwhile, markets are deeply concerned over the direction of economic policy under Erdogan, with inflation at almost 16 percent but the central bank reluctant to raise rates in response. Trump tweeted Friday morning.

A combination of factors, according to experts, have led to fears the country is sliding into an economic crisis. The lira has fallen about 40 percent against the dollar this year. Turkey fears the fine on Halkbank - a small player by global standards - could follow the precedent of the hefty U.S. treasury fines levied on German and Swiss banks for sanctions-busting.

Turkish President Tayyip Erdogan addresses his supporters in Bayburt, Turkey August 10, 2018. The moves reflect how sensitive investors remain to risks in a sector which lost billions in Greece and has yet to fully restore profitability after the 2008 financial crisis.

"You will not make money at the expense of Turkish people". One U.S. dollar traded at 5.96 lira by 2:15 p.m. "Don't heed them. Don't forget, if they have their dollars, we have our people, our God", Erdogan said.

The defiant tone and war rhetoric only hurt the lira more, before Erdogan's finance chief and son-in-law, Berat Albayrak, tried to ease investor concerns during a conference, saying the government would safeguard the independence of the central bank.

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Relations with Turkey are not good!