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Turkey slaps retaliatory tariff hikes on key US products
TURKEY on Wednesday 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 in trading on Friday and Monday - however continued to claw back some ground on financial markets, rallying around 5 per cent against the dollar.
But a court 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 that 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".
President Donald Trump had previously announced that the United States was doubling steel and aluminium tariffs on Turkey.
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.
The tariff increases amount to a doubling of the existing rate, the state-run Anadolu news agency said, in an apparent parallel response to Mr Trump's move.
The decree said the move brought tariffs to 50 per cent on imports of US rice, 140 per cent on hard alcoholic drinks such as spirits, 60 per cent on leaf tobacco and 60 per cent 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 US$533 million.
Mr 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."
Mr Erdogan on Tuesday said that Turkey would boycott US electronic goods such as iPhones, even though he has himself been photographed repeatedly using the product himself.
He also made his now famous speech on the night of the July 2016 failed coup calling citizens out into the street through FaceTime, an iPhone app.
Moves by the central bank to ensure Turkish banks have liquidity and a planned conference call by Turkish Finance Minister Berat Albayrak, who is Mr Erdogan's son-in-law, on Thursday have gone some way to giving reassurance to investors.
The lira was trading on Wednesday at 6.1 to the dollar, a gain in value on the day of 4.5 per cent.
But many analysts say the only way for the authorities to show they are really serious about tackling Turkey's economic problems - which include inflation approaching some 16 per cent - would be 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 add to downward pressure on tbe 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,Mr Kalin said the US needs to be respectful to the judicial procedures in Turkey.
Mr 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," Mr 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, arrived in Ankara on Wednesday for lunchtime talks with Mr Erdogan.
Turkish officials have also been keen to emphasise that Ankara wants to retain strong ties with Europe, which has also expressed deep unease with Mr Trump's trade policies.
Mr Erdogan was due to speak on the phone with German Chancellor Angela Merkel on Wednesday and French President Emmanuel Macron on Thursday, the presidency said.
A Turkish court Tuesday released two Greek soldiers detained since March on espionage charges for illegally crossing the border in a case that has stoked tensions with Brussels. AFP