NEW DELHI: Amidst the ongoing trade and diplomatic war between two NATO allies — Turkey and the United States (US) — Turkey’s government on Wednesday announced increase in tariffs on US-imported products such as cars, alcohol and cigarette. The move will raise duties on American alcohol to 140 per cent, cars to 120 per cent and tobacco leaves to 60 per cent. It has also announced doubling of tariffs on rice, cosmetics and coal.
Turkish President Recep Tayyip Erdogan also urged his citizens to boycott US electronic goods, including Apple’s iPhone, in favour of South Korea’s Samsung and local brands.The hike in tariffs of made-in-US products comes at a time when Turkish lira tumbled by more than 40 per cent against the dollar since the start of this year, in what Erdogan calls an “economic warfare” on part of the US. The tariffs rose significantly in last one week after US President Donald Trump’s announcement of sanctions and tariffs on Ankara last week over the detention of American evangelical pastor Andrew Brunson.
Brunson has been held in Turkey since 2016 on charges of spying and involvement in the country’s failed coup that took place two years ago.After a failed negotiation between delegations of the two countries, Trump had on Friday tweeted that he would double tariffs on Turkish steel and aluminum. The US announcement, coupled with rising inflation in the country and Erdogan’s reluctance to increase lending rates, degraded lira’s value by 30 per cent in the next three days, which impacted currencies of Asian nations and the Euro.
Indian rupee too nosedived and breached the 70-mark for the first time against the US dollar because of the continued turmoil in Turkey, among other reasons. Lira, however, saw some recovery in the last two days after Turkey’s banking regulator issued statements on Tuesday to try to ward off a crisis. The steps spurred a nearly 3 per cent gain in the lira to 6.09 per dollar, after an 8.4 per cent advance on Tuesday.
According to International Monetary Fund data, the US was the fourth largest source of imports to Turkey last year, accounting for $12 billion of imports. Turkey’s exports to the US last year stood at $8.7 billion, making it Turkey’s fifth-largest export market. Some estimates say that Turkey’s new tariffs affected around $1 billion of imports last year.