Turkey doubled tariffs on some U.S. imports, including alcohol, cars and tobacco on Wednesday in retaliation for U.S. moves, while the lira rallied further after the central bank’s liquidity moves had the effect of supporting the currency.
Ankara acted amid increased tension between the two NATO allies over Turkey’s detention of a Christian American pastor and other diplomatic issues, which have helped send the lira tumbling to record lows against the dollar.
The currency has lost nearly 40% against the dollar this year, driven by worries over President Recep Tayyip Erdogan’s growing influence on the economy and his repeated calls for lower interest rates despite high inflation. It rebounded some 6% on Wednesday, briefly strengthening to less than 6 against the dollar, after the central bank squeezed lira liquidity in the market.
A decree signed by Mr. Erdogan doubled Turkish tariffs on passenger cars to 120%, on alcoholic drinks to 140% and on leaf tobacco to 60%. Tariffs were also doubled on goods such as cosmetics, rice and coal.
‘Deliberate attacks’
The duties were raised in response to the U.S. administration's “deliberate attacks on our economy”, Vice-President Fuat Oktay wrote on Twitter. Last Friday, U.S. President Donald Trump said he had authorised higher tariffs on aluminium and steel imports from Turkey.
The U.S. was the fourth largest source of imports to Turkey last year, accounting for $12 billion of imports, according to IMF statistics. Turkey’s exports to the U.S. last year amounted to $8.7 billion, making it Turkey’s fifth-largest export market.
The NATO allies have been at loggerheads over a wide range of topics, including diverging interests in Syria, Ankara’s ambition to buy Russian defence systems and Andrew Brunson, a pastor on trial for terrorism charges.
Mr. Trump has repeatedly asked for Mr. Brunson’s release, while Ankara said the decision was up to the court. On Wednesday, a Turkish court in the Aegean province of Izmir, where Mr. Brunson is on trial, rejected the pastor’s appeal to be released from house arrest.
Washington warned more economic pressures may be in store for Turkey if it refuses to release Mr. Brunson.