Turkey doubles tariffs on some US imports; Turkish lira rallies

ISTANBUL (Reuters): Turkey doubled tariffs on some US imports including cars, alcohol and tobacco on Wednesday in retaliation for US moves, but the lira rallied a further six% after a fresh move by banking authorities to underpin the currency.

Ankara acted amid increased tension between the two NATO allies over Turkey’s detention of a pastor and other diplomatic issues, which have helped to send the lira tumbling to record lows against the dollar.

The rebound in the Turkish currency to stronger than 6.0 against the dollar was driven by a banking watchdog’s step to limit swap transactions and by hopes of improved relations with the European Union.

Last Friday, US President Donald Trump said he had authorized higher tariffs on aluminum and steel imports from Turkey.

A decree signed by President Tayyip 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.

“The import duties were increased on some products, under the principle of reciprocity, in response to the US administration’s deliberate attacks on our economy,” Vice President Fuat Oktay wrote on Twitter.

The United States 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 United States last year amounted to $8.7 billion, making it Turkey’s fifth-largest export market.

The row with Washington has helped to drive the lira to record lows, with the currency losing more than 40% of its value against the dollar this year, prompting central bank liquidity moves to support it.

The lira firmed as far as 5.75 against the dollar on Wednesday and stood at 5.9350 at 0745 GMT in a move initially triggered by a Turkish court decision to release two Greek soldiers facing espionage charges.