Published: Wed, August 15, 2018
Finance | By Gustavo Carr

Turkey raises tariffs on United States imports amid economic spat

Turkey raises tariffs on United States imports amid economic spat

Turkish President Recep Tayyip Erdogan gas called for a boycott of iPhones other United States electronic goods in a fiery speech.

Turkey refused to release an American pastor who has been in detention in Turkey for almost two years now.

Erdogan again urged Turks to convert their USA dollars into the Turkish currency - the lira - to give it a boost as it continues to drop in value.

'If (the United States) have the iPhone, there's Samsung on the other side, ' he said, referring to USA giant Apple's iconic phone and the top South Korean brand. "Whatever we pay for from overseas, we will do here", he said, referring to a cell phone made in Turkey.

Ankara acted amid increased tension between the two North Atlantic Treaty Organisation allies over Turkey's detention of a pastor and other diplomatic issues, which have helped to send the lira tumbling to record lows against the dollar.

During his speech, Erdogan singled out the iPhone as a notable American import.

Erdogan has remained defiant after Trump doubled tariffs on aluminum and steel imports from Turkey to 20% and 50%, respectively. "We will protect our economic independence by being tight-knit together", he said.

"The issue of using national currencies in bilateral trade operations is a topic that has been raised by the Russian side for a long time and consistently at various levels, including at the top level", said Kremlin spokesman Dmitry Peskov.

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Erdogan admitted the Turkish economy had problems - including a widening current account deficit and inflation of nearly 16 percent but added: 'Thanks to God, our economy is functioning like clockwork'.

The lira was around 6.55 to the dollar on Tuesday, up 6% on the previous day after the central bank freed up cash for banks, and a slight recovery from a record low of 7.23 on Sunday.

The Turkish central bank has promised that Turkish banks will have all the money they need. Eurozone countries run a trade surplus with Turkey but it is small and in the two previous Turkish financial crises since the turn of the millennium, European exporters have been able to divert their business to other markets.

President Erdogan said on Tuesday that Turkey was taking measures to stabilise its economy and should not "give in to the enemy" by investing in foreign currencies.

Investors fear the country's financial crisis could spread, with Mr Erdogan describing the crash as a "political plot" against Turkey. Most economists say Erdogan should raise interest rates to support the Turkish lira, but Erdogan wants to keep rates low to support growth.

The United States is also considering a fine against Turkey's state-owned Halkbank for allegedly helping Iran evade US sanctions.

How much has Turkey's currency dropped?

While Erdogan didn't address their concerns in his speeches on Tuesday, he suggested Turks have already begun responding to his call to convert foreign exchange into lira because it would be tantamount to "surrendering" if they did otherwise.

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