Wednesday, 20 October 2021

Turkey slaps retaliatory tariff hikes on key US products


ISTANBUL: Turkey hiked tariffs on imports of several key US products in retaliation for American sanctions against Ankara, as a bitter dispute between the two allies that has battered the Turkish lira showed no sign of ending.

The lira – which lost just under a quarter of its value on Friday and Monday – however continued to claw back some ground on financial markets, rallying around five percent against the dollar.

A court meanwhile rejected an appeal for the release of American pastor Andrew Brunson – whose detention for almost two years sparked the crisis – leaving no immediate solution to the Turkey-US row in sight.

The lira s fall had raised fears Turkey was on the verge of a fully-fledged economic crisis, especially in its banking system, that could spill over into Europe and other markets.

Turkish Vice President Fuat Oktay said that the tariff hikes were ordered “within the framework of reciprocity in retaliation for the conscious attacks on our economy by the US administration”.

The hikes were published in Turkey s Official Gazette in a decree signed by President Recep Tayyip Erdogan, who has repeatedly described the crisis as an “economic war” that Turkey will win.

President Donald Trump had previously announced that the United States was doubling steel and aluminium tariffs on Turkey.

The Turkish tariff increases amount to a doubling of the existing rate, the state-run Anadolu news agency said, in an apparent parallel response to Trump s move.

The decree said the move brought tariffs to 50 percent on imports of US rice, 140 percent on hard alcoholic drinks like spirits, 60 percent on leaf tobacco and 60 percent on cosmetics.

Trade Minister Ruhsar Pekcan said Turkey had doubled tariffs on 22 products imported from the United States, saying the tariffs were together worth an additional $533 million.

Erdogan s spokesman Ibrahim Kalin added: “Turkey is not in favour of an economic war with anyone but when attacked… will take all necessary steps.”

Erdogan on Tuesday said Turkey would boycott US electronic goods like iPhones, even though he has himself been photographed repeatedly using the product himself.

Moves by the central bank to ensure Turkish banks have liquidity and a planned conference call by Turkish Finance Minister Berat Albayrak, who is Erdogan s son-in-law, on Thursday have gone some way to reassuring investors.

Some 3,000 investors registered to join Albayrak s planned tele-conference, the private NTV broadcaster reported.

The lira was trading on Wednesday at 6.0 to the dollar, a gain in value on the day of 5.2 percent.

It was boosted after the Turkish banking regulator cut the amount of funds banks can use for currency swap trading, limiting the possibilities for speculating against the lira.

But analysts say such measures are artificial stop-gaps and do not deal with the core issues hurting Turkey s economy – especially inflation approaching some 16 percent — which are crying out for a sharp interest rate hike.

Michael Hewson, chief market analyst at CMC Markets UK, warned the Turkish tariff hikes risked provoking a new reaction from Trump and ultimately adding to downward pressure on the lira.

“President Erdogan appears to be playing a dangerous game if he thinks he can come out on top in this spat with the US,” he commented.

As a court in the western Turkish city of Izmir rejected a new appeal to free Brunson on Wednesday, spoksman Kalin said the US needs to be respectful of the judicial procedures in Turkey.

Erdogan has warned Turkey could seek alternative partners, pointing to Ankara s strong ties with Russia, Iran and China.

“The US is our major trade partner but it s not the only one,” Pekcan, the trade minister, was quoted as saying by the official Anadolu news agency. “We have other partnerships and alternative markets.”

Emir Sheikh Tamim bin Hamad Al-Thani of gas-rich Qatar, one of Turkey s very closest allies, on Wednesday held talks with Erdogan which also included Albayrak.

“Qatar has pledged $15 billion of direct investments in Turkey,” presidential spokesman Kalin wrote on Twitter afterwards. – (AFP) 

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