U.S. tariffs hike adds to Turkey's economic problems

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US President Donald Trump had earlier announced doubling of the already substantial Section 232 steel tariffs on imports from Turkey to 50 per cent.

Trump's move reflects a confluence of factors that have led to worsening relations between the White House and Turkish President Recep Tayyip Erdogan, and his willingness to ratchet up economic pain on Turkey could lead to a much bigger clash.

One of the triggers of the turmoil has been a standoff with the US over a detained American pastor that Turkey, a North Atlantic Treaty Organisation ally, has put on trial for espionage and terror-related charges linked to a failed coup attempt in the country two years ago.

Trump's tweet caused a further drop in the Turkish currency, which is now down 13 percent on the day.

The president, who says a shadowy "interest rate lobby" and Western credit ratings agencies are attempting to bring down Turkey's economy, appealed to Turks' patriotism.

"Repeated efforts to communicate to the US administration that none of the stated criteria driving America's tariffs are applicable to Turkey have thus far proven fruitless", Turkish Trade Minister Ruhsar Pekcan said.

"I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar!"

Foreign Ministry Spokesperson Hami Aksoy also said in a statement that Turkey wanted issues to be solved through diplomacy, dialogue, good intentions and bilateral understanding.

The new USA tariffs on Ankara are against the rules set by the World Trade Organization (WTO), Turkey's Trade Ministry said on Friday. Turkey retaliated with Erdogan ordering authorities to freeze the assets of the US justice and interior ministers in Turkey - "if there are any".

"If you have dollars, euros or gold under your pillow, go to banks to exchange them for the Turkish lira".

This year, it lost more than 40 per cent.

Erdogan on Thursday portrayed the run on his currency as a "campaign" to harm Turkey and called on people not to worry.

But President Erdogan brushed off any concerns during a speech in the northeastern city of Bayburt on Friday, saying: 'The dollar can not block our path.

The sides held talks in Washington this week but failed to resolve the spat, and Trump took advantage of Turkey's turmoil on Friday to turn the screws on the country.

Officials from Erdogan's office said the two on Friday "expressed pleasure" that economic and financial ties between their countries were progressing "positively" and of the continued cooperation in the defense industry and energy.

Turkey wants the U.S. to extradite cleric Fethullah Gulen, a Pennsylvania-based cleric who Turkish authorities say masterminded the coup attempt in which 250 people were killed.

Turkey's sovereign dollar-denominated bonds tumbled, with many issues trading at record lows. As the lira falls in value, the debt becomes harder to pay. "Those who think they will make us kneel via economic manipulation do not know us at all", he said.

"President Erdogan's strengthened powers under the new presidential system have made it increasingly uncertain whether policymakers will be able to act to stabilize the economy", William Jackson, the chief emerging markets economist at Capital Economics in London, said.

The central bank raised interest rates to support the lira in an emergency move in May, but it did not tighten at its last meeting.

USA stocks were also rattled.

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