Trump doubles tariffs on Turkey, stoking jitters

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The Turkish lira fell as much as 20% versus the dollar Friday after President Donald Trump said he would double the rates of tariffs on Turkish steel and aluminum.

It came as a Turkish delegation returned from the United States, reporting no progress on negotiations involving a USA pastor imprisoned in Turkey.

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Turkey vowed retaliation "without delay" and warned the move would further harm relations between the two allies.

Mr Trump said he had authorised a 20% duty on aluminium and 50% on steel.

Erdogan, a self-described "enemy of interest rates", wants cheap credit to fuel growth, but investors fear the economy is overheating.

The lira has now lost over a third of its value against both the dollar and the euro this year, with the currency battered by both concerns over domestic economic policy and the political situation.

Erdogan also said Turkish people should not worry, saying: "We also have measures to guard against all negative possibilities".

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"There are some big moves still in Turkey and Russian Federation that are preventing everyone from enjoying the summer", said Deutsche Bank strategists Jim Reid and Jeff Cai in their morning note.

"It is astonishing that no matter how punished the Lira looks, traders are showing absolutely no indication that they are finished with pricing in "bad news" into the market", Ahmad said.

But given the sizeable personal control Erdoğan commands over the running of the Turkish economy - after granting himself the right to appoint the central bank's governors and naming his son-in-law as finance minister - economists reckon the government will attempt to muddle through the country's current problems. On Thursday Ergodan said Turkey will withstand the economic pressure. As the currency drops, Turkish companies and households with debt in foreign currencies see their debts expand. Earlier this month, the United States slapped sanctions against Turkey's ministers of justice and interior in response to Brunson's detention.

Coupled with an inflation rate of almost 16 per cent, that could cause a lot of damage to the local economy.

'The price of the food that I buy increases day by day, the fuel that I put in my vehicle to distribute lunches is more expensive, but I can not raise my prices from one day to the next, ' she said. "On some days, I end the day with a loss".

Stock markets across the world retreated as investors watched Turkey with growing unease.

Concerns were amplified Friday by a report in the Financial Times that the supervisory wing of the European Central Bank (ECB) had over the last week begun to look more closely at eurozone lenders' exposure to Turkey.

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