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How a Trump tweet and an Erdogan speech shook Turkey’s economy

How a Trump tweet and an Erdogan speech shook Turkey’s economy

US President Donald Trump said on Friday he had doubled steel and aluminium tariffs on Turkey, adding to pressure on its troubled economy amid a diplomatic row with Washington.

Relations between the two countries deteriorated in the wake of US President Donald Trump's decision to increase tariffs on Turkish aluminum and steel to 20% and 50% respectively.

At 8.47 a.m. Eastern time - 3:47 Turkey - Trump had turned to Twitter to announce that he would be doubling steel and aluminum sanctions on Turkey. As long as it does not respect Turkey's sovereignty, the bilateral relationship will be in danger. Earlier, it had crashed some 12 percent through the 6.00 level for the first time in history, trading at one point at more than 6.20 lira per dollar.

All eyes will be on the lira when foreign exchange markets reopen on Monday after the weekend pause.

Turkey's spat with the United States has further weighed on the lira.

Washington slapped sanctions on Turkey's interior and justice ministers this week, angering Ankara which responded with the tit-for-tat move, with Turkey saying they will freeze the assets of the USA "justice and interior ministers" last week. "Nobody should try to make us fall into this trap, we won't be fooled by this plot, nobody should get excited".

"The progress that we want to be made is to have Pastor Brunson return home", she added.

Erdogan renewed his call for Turks to sell dollars and buy lira to boost the currency, while telling business owners to not stockpile the American currency.

In Rize, Erdogan said the United States would pay a price by challenging Turkey for the sake of "petty calculations", denouncing Washington for declaring "economic war on the entire world" and holding countries "for ransom through sanction threats".

On Saturday, Erdoğan said it was a pity the U.S. was choosing Brunson over its strategic North Atlantic Treaty Organisation ally.

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He appeared to indicate that the entire alliance between Turkey - which joined North Atlantic Treaty Organisation in 1952 with strong American backing - and Washington was at stake.

"We can only say "good-bye" to anyone who sacrifices its strategic partnership and a half century alliance with a country of 81 million for the sake of relations with terror groups", he said.

Brunson was indicted for allegedly having links with the outlawed Kurdistan Workers' Party and Fethullah Gulen, an exiled Turkish preacher who has allegedly masterminded the failed coup attempt in 2016 to topple Erdogan. And what he did say Friday morning could weigh on global markets for some time to come.

Earlier this week US and Turkish officials met in Washington to discuss issues that have pitted the two North Atlantic Treaty Organisation allies against each other.

Take them immediately to the banks and convert them into liras.

What are Mr Erdogan's latest comments?

Relations used to be based on strategic interests, but more recently, they've been dominated by discord over alliances in Syria's civil war, Ankara's strengthening ties with Moscow, and its uneasy position within North Atlantic Treaty Organisation.

Turkish President Recep Tayyip Erdogan has rejected "threatening language" of the United States administration.

"You arrest my Halkbank general deputy director?"

Turkey later said Erdogan had held a phone call with Russian President Vladimir Putin to discuss economic ties.