Adding to Turkey's fiscal woes, new pension and spending increases announced by president Erdogan in the lead-up to his recent election win have further weakened the outlook for Turkey's public finances. In addition to the steep drop in the Turkish Lira, which effectively reduces the impact of the tariffs, the US has so far been unsuccessful in persuading Turkish President Recep Tayyip Erdoğan to release USA pastor Andrew Brunson. That caused a further drop in the lira.
"If there is anyone who has dollars or gold under their pillows, they should go exchange it for liras at our banks", he said during an address to supporters. "This is a domestic and national struggle".
Erdogan on Friday appealed for calm and called on people to change foreign money into local lira. As the lira falls in value, the debt becomes harder to pay. "The US should not forget that it could lose a strong and honest partner like Turkey if it does not change its attitude", he was quoted as saying by Hurriyet daily.
Iran has also suffered from a major tumbling of its currency this year partly over reimposition of U.S. sanctions after Trump abandoned a 2015 nuclear deal.
England v India: James Anderson strikes twice before rain returns at Lord's
If the weathermen are right, the game should start on time on Friday and it's only on Monday again that there are chances of rain. It is the first time a whole Test match day has been lost to the weather at the home of cricket since May 2001, against Pakistan.
The currency has fallen 66 per cent since the start of the year, pushing up the cost of goods for Turkish people and shaking worldwide investors' confidence in the country.
Erdogan has cast the sell-off in the currency that has followed the trade row as an economic war and an attempt to undermine Turkey's economy. Lindsey GrahamLindsey Olin GrahamGOP lawmaker: Every white suburban district in the country will be a swing district this year The Hill's Morning Report - Trump to GOP: I will carry you GOP senator: "Real likelihood" Dems win the House "by 10 or 12 more seats than they need" MORE (R-S.C.) tweeted Friday. The economic options include a central bank intervention by raising interest rates, although this would have a temporary effect, and Erdogan is famously hesitant to raise rates.
The Turkish delegation met with the State Department's No. 2 official, John Sullivan, on Wednesday to address friction between the North Atlantic Treaty Organisation allies. He claims higher rates lead to higher inflation - the opposite of what standard economic theory says.
The lira was trading at 5.95 to the dollar, a loss on the day of 7.5 percent.
Turkish President Tayyip Erdogan talks to media in the Black Sea city of Ordu, Turkey August 11, 2018. "Don't forget, if they have their dollars, we have our people, our God". While many of Turkey's challenges are specific to that country, there are certain characteristics - a heavy debt load following a prolonged, low United States interest-rate driven borrowing binge in dollars - broadly shared throughout emerging markets.
The timing of Mr Trump's tweet coincided with an announcement by Turkey's Treasury and Finance Minister Berat Albayrak of the government's new economic policy which is aimed at restoring confidence in the lira.
"Normally, Turkey might be able to shrug off this kind of story; however, right now the Turkish economy is already in the terminal stages of a descent into crisis". Erdogan has frequently blamed an "interest rate lobby" and Western credit ratings agencies for trying to bring down Turkey's economy.