With US sanctions and tariffs hitting Turkey this month for its refusal to release an American pastor, the relationship between the two North Atlantic Treaty Organisation allies is crumbling amid fears on the regional impact.
"Aluminium will now be 20 per cent and Steel 50 per cent". This is just another threat that traders need to factor in, when you consider that the markets are already overwhelmed with prolonged tension around the global trade war narrative, and the unpredictable nature of the Trump Administration that has seen a threat of sanctions on Turkey, new sanctions imposed on Russian Federation and re-imposed sanctions on Iran in just over one week.
President Donald Trump abruptly announced Friday that he would double the rate of import tariffs on Turkish metals - forcing Turkey to ask citizens to buy its own crashing currency.
Turkey is now under a 25 percent tariff on imported steel and 10 percent on aluminum, which went into effect in March.More news: Grieving Orca Mother Still Carrying Her Dead Calf. It's Been 16 Days
While Turkey and the United States are at odds over a host of issues, the most pressing disagreement has been over the detention of U.S. citizens in Turkey, notably Christian pastor Andrew Brunson who is on trial on terrorism charges. It is, however, outside the top 15 for aluminium exports. The rand dived more than 1.10% on a lack of risk appetite, whereas the Turkish lira is the talk of the town after plunging an astonishing 10%. Turkey has mostly done that to itself - until, that is, Trump started tweeting.
One of the triggers of the turmoil has been a standoff with the USA over a detained American pastor that Turkey, a North Atlantic Treaty Organisation ally, has put on trial for espionage and terror-related charges linked to a failed coup attempt in the country two years ago.
Brunson denies the charge and his cause resonates with Christian conservative supporters of Trump, who could also be influential as Republicans seek to retain control of Congress in midterm elections in November.
Rep. Ted Lieu (D-Calif.), who has voiced support for impeaching the president, tweeted Friday, "On this I agree with [Trump]".More news: US senators ask Assange to testify in Russia probe
"It is hard to imagine how the United States and Turkey fix their relationship, which was already faltering, after this episode". There are fears that European markets are more exposed to Turkey shocks than has been priced in, while traders are jumping on any opportunity to sell the pound at present. A looming debt crisis that potentially involves a Turkish request for assistance or a bailout from the International Monetary Fund could have significant European and global economic repercussions.
The currency's drop - 40% so far this year - has become a gauge of fear over a country facing the fallout of years of debt-fuelled growth, worldwide concern over President Recep Tayyip Erdogan's push to amass power, and a souring in relations with allies like the US. US Defense Secretary James Mattis called his Turkish counterpart Hulusi Akar to discuss defence relations, Syria and counter-terrorism. "Repeated efforts to communicate to the USA administration that none of the stated criteria driving America's tariffs are applicable to Turkey have thus far proven fruitless", he said. At this point, we do not play ball.
Trump's announcement saw the Turkish lira drop even further, crashing to a 19 percent daily loss against the greenback. Ms Ozkhan was released on July 16.
He also urged Trump to recognize the 1915 Turkish slaughter and exile of 1.5 million Armenians as a genocide, which USA presidents have declined to do for decades.More news: Kylie Jenner is making a video about her 'lip filler journey'
Turkey vowed retaliation "without delay" and warned the move would further harm relations between the two allies. Another bill being debated calls to restrict global loans to Ankara until it frees Mr Brunson.