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Turkey increases tariffs on some U.S. goods, escalating feud

Turkey’s President Recep Tayyip Erdogan, as he shakes hands with Qatar’s Emir Sheikh Tamim bin Hamad
Turkish President Recep Tayyip Erdogan has refused to let his nation’s central bank raise interest rates to support the currency. He’s blamed troubles on foreign powers, particularly the U.S., which he says is waging an “economic war.”
(Pool Photo)

Turkey said Wednesday that it is increasing tariffs on some U.S. products such as cars, alcohol, and coal — a move that is unlikely to have much economic impact but highlights the nation’s deteriorating relationship with the United States in a feud that has already helped trigger a currency crisis.

The Turkish government said tariffs on American cars will be doubled to 120% and that those on alcoholic drinks will be doubled to 140%. Overall, the duties will amount to $533 million, a relatively small sum meant as retaliation for President Trump’s recent decision to double tariffs on Turkish steel and aluminum.

The tariffs came the day after President Recep Tayyip Erdogan said Turkey would boycott U.S. electronic goods, singling out iPhones. It was unclear how the boycott would be enforced or encouraged.

Beyond the bluster of the two world leaders, the spat between the NATO allies has exacerbated a financial storm in Turkey. International investors have been put off by the country’s high levels of foreign debt and Erdogan’s refusal to allow the central bank to raise interest rates to support the currency, as experts say it should.

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The currency drop is particularly painful for Turkey because it has accumulated a high debt in foreign currencies.

The Turkish lira has dropped to a series of record lows in recent weeks, having fallen 37% so far this year. It recovered a bit, by 5% to about 6.05 lira per dollar Wednesday, after the government took steps to shore up the currency by reducing the daily limit in bank foreign currency swap transactions.

On Wednesday, Turkish officials said Qatar had pledged $15 billion of direct investments for Turkey in a bid to help Turkey’s economy. The officials said that during a meeting with Erdogan in Ankara, Qatar’s emir, Sheikh Tamim bin Hamad al Thani, pledged to “quickly implement” the investment package.

Also helping the Turkish currency were moves by Turkey to gain favor with European countries.

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Turkey decided to release two Greek soldiers from prison Tuesday. On Wednesday, the country freed Amnesty International’s honorary chairman for Turkey, Taner Kilic, from prison pending the outcome of his trial on terror charges. And Erdogan held a phone call with German Chancellor Angela Merkel and planned to speak this week with France’s Emmanuel Macron.

Investors seemed to focus on this and underlying economic problems over the exchange of tariffs with the United States, which analysts said was unlikely to cause serious pain.

Ozgur Unluhisarcikli, director of the German Marshall Fund’s Ankara office, noted that Turkey buys just 0.5% of all U.S. exports and most of that is civilian aircraft and weapons.

“This is just a symbolic gesture,” according to Unluhisarcikli. “So anything other than weapons purchases would not hurt the United States.”

It was unclear, meanwhile, whether the boycott of American electronics would be enforced in any way.

Apple Inc. has 22% of the smartphone market in Turkey, where 11.4 million units were sold last year, according to Ramazan Yavuz, research manager at IDC consultancy company.

Although preference for Apple products is strong, their already high prices are curbing demand, Yavuz said, adding that the boycott “is expected to reduce Apple’s performance in the country in the upcoming quarters.”

Attention will turn Thursday to an address by the finance minister to foreign investors for clues on any change in economic policy.

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Investors are looking for substantive economic policy changes by the Turkish president — namely the acceptance of higher interest rates — whereas Erdogan has so far reacted mainly by blaming foreign powers, particularly the United States, which he says is waging an “economic war.”

Washington has imposed financial sanctions on two Turkish ministers and doubled steel and aluminum tariffs on Turkey, as Trump tries to secure the release of Andrew Brunson, a 50-year-old American pastor being tried in Turkey on espionage and terrorism-related charges.

On Wednesday, a court rejected an appeal for Brunson’s release from detention and for a travel ban against him to be lifted, Turkey’s state-run Anadolu news agency reported. It said a higher court was scheduled to review the appeal.

Although he was released to home detention, Brunson faces a prison sentence of up to 35 years if he is convicted on both counts at the end of his ongoing trial.

The evangelical pastor, who is originally from Black Mountain, N.C., has lived in Turkey for 23 years and led the Izmir Resurrection Church.


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