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How a Trump tweet and an Erdogan speech shook Turkey’s economy

How a Trump tweet and an Erdogan speech shook Turkey’s economy

President Donald Trump broke the news on social media that he authorized the doubling of existing steel and aluminum duties on imports from Turkey.

Turkey's currency, the Lira, plunged on Friday sparking concerns about the country's financial stability as investors anxious about Turkey's president's economic policies and a dispute with the U.S.

In announcing 20 percent tariffs on aluminum and 50 percent tariffs on steel, Trump said "the Turkish Lira, slides rapidly downward against our very strong Dollar!" Since then Trump and his vice president Mike Pence have repeatedly called for his release while Ankara said the decision was up to the courts.

Officials from Mr Erdogan's office said the two men "expressed pleasure" that relations between Turkey and Russian Federation were progressing "positively" amid joint defence and energy projects.

The Turkish and USA governments have locked horns over a wide rang of issues inlcuding their interests in Syria, Turkey's ambition to buy Russian defence systems and the case of evangelical pastor Andrew Brunson, who is now on trial in Turkey on terrorism charges.

Harsher US tariffs were likely to punish Turkey's already faltering steel exports to the United States.

On March 1, Trump had announced global tariffs of 10 percent on all aluminum to the US and 25 percent on all steel imports.

"Also completely underestimated is Turkey's capacity to effectively shut down everything that happens in Brussels if they want to, because Brussels works on consensus and nothing, literally nothing happens without consensus", he said.

The news comes as tensions between the USA and Turkey continue to grow over the North Atlantic Treaty Organisation ally's continued detainment of Pastor Andrew Brunson.

The Turkish lira has lost about 40 percent of its value this year alone, largely over worries about Erdogan's influence over the economy, his repeated calls for lower interest rates in the face of high inflation and deteriorating ties with the United States.

The new tariffs announced on Friday come as the United States increases pressure for the release of American pastor Andrew Brunson, who has been in Turkish custody since 2016 on charges of espionage. Brunson was among many foreign nationals detained by Turkish President Erdogan in the wake of a failed 2016 coup attempt.

The US on August 1 imposed financial sanctions on its North Atlantic Treaty Organisation ally, blocking Turkey's ministers of justice and interior from doing business with Americans.

Erdogan said that there were "various campaigns being carried out" against the country.

Erdogan has downplayed the currency crisis, urging Turks to convert any stashed-away gold or foreign currency into lira, thereby waging a "war of independence" against America. "Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies", Erdogan said.

The currency is down 40 percent just this year, shaking global investors' confidence in the country. High level meetings in Washington between US and Turkish officials ended this week without an apparent resolution.

Erdogan's remarks come after pro-government Turkish lawyers submitted a petition for U.S. soldiers at Incirlik Air Base to be arrested, claiming they were connected to the Gulen movement, which Ankara claims was behind the failed coup attempt. He claims higher rates lead to higher inflation - the opposite of what standard economic theory says.