Turkey boosts tariffs on some U.S. products, more than doubling them on cars and alcohol

Turkey is boosting tariffs on imports of certain U.S. products, including rice, cars, alcohol and coal — escalating a feud with the United States that has helped trigger a currency crisis.

Turkey, U.S. in economic war ostensibly about pastor, though relations between NATO allies have been tense

Turkey's President Recep Tayyip Erdogan says his country will boycott U.S.-made electronic goods, including the iPhone, amid a diplomatic spat that has helped trigger a Turkish currency crisis. (Pool via The Associated Press)

Turkey is boosting tariffs on imports of certain U.S. products, including rice, cars, alcohol, coal and cosmetics — escalating a feud with the United States that has helped trigger a currency crisis.

Tariffs are more than doubling for American cars and alcohol, for instance, to 120 per cent and 140 per cent, respectively. 

"Turkey does not favour an economic war, but it cannot remain unresponsive when it is attacked," said Ibrahim Kalin, a spokesperson for President Recep Tayyip Erdogan.

Tariffs have been imposed on 22 types of produce and goods imported from the United States, amounting to $533 million US of extra duties, according to a report in the state-run Anadolu Agency, quoting Rushar Pekcan, the country's trade minister.

Pekcan said, according to the report, "the United States is an important trading partner, but it is not our only partner. We have other partners and alternative markets."

She said Turkey would continue to "protect the rights of Turkish companies and retaliate" against unjust actions by the United States.

U.S. President Donald Trump and Erdogan, seen on July 11, have appeared to get on well personally, but the NATO allies have several areas of economic and political conflict. (Geert Vanden Wijngaert/Associated Press)

The tariffs come a day after Erdogan said Turkey would boycott U.S. electronic goods, singling out iPhones. He suggested Turks would buy local or Korean-made Samsung phones instead, although it was unclear how he intended to enforce the boycott.

The Turkish lira has dropped to record lows in recent weeks, having fallen some 42 per cent this year. It recovered a bit, by four per cent to around 6.12 lira per U.S. dollar Wednesday, after the government took steps to shore up the currency by reducing the daily limit in bank foreign currency swap transactions.

Looks to re-emphasize European ties

Also helping the Turkish currency were moves by Turkey to gain favour with European countries.

It decided to release two Greek soldiers from prison on Tuesday. On Wednesday, Turkey then freed Amnesty International's honorary chairman for Turkey, Taner Kilic, from prison pending the outcome of his trial on terror charges. And Erdogan held a phone call with German Chancellor Angela Merkel and planned to speak Thursday with France's Emmanuel Macron.

Turkey also announced Wednesday that it had received $15 billion of direct investments from Qatar, a country facing its own economic hurdles after being subjected to a blockade last year led by Saudi Arabia.

Fundamental concerns about the Turkish economy persist, however.

Investors are worried about Erdogan's control over the central bank and his pressure to keep it from raising interest rates. Higher rates would slow economic growth, which he wants to egg on, but are urgently needed to support the currency and tame inflation, experts say.

The currency drop is particularly painful for Turkey because it has accumulated a high debt in foreign currencies.

Attention will turn Thursday to an address by the finance minister to foreign investors for clues on any change in economic policy.

Erdogan has reacted to the financial instability by blaming foreign powers, in particularly the United States, a longtime NATO ally, which he says is waging an "economic war" as part of a plot to harm Turkey.

American pastor remains under house arrest

Washington has imposed financial sanctions on two Turkish ministers and doubled steel and aluminum tariffs on Turkey, as U.S. President Donald Trump tries to secure the release of Andrew Brunson, a 50-year-old American pastor being tried in Turkey on espionage and terrorism-related charges.

On Wednesday, a court rejected an appeal for Brunson's release from detention and for a travel ban against him to be lifted, the state-run Anadolu Agency reported. A higher court was however, was scheduled to review the appeal, the agency said.

Andrew Craig Brunson, an evangelical pastor from Black Mountain, N.C., arrives at his house in Izmir, Turkey, on July 25. Brunson has lived in Turkey for 23 years, but his case has been taken up as a cause for the U.S. government. (Emre Tazegul/Associated Press)

Although he was released to home detention, Brunson faces a prison sentence of up to 35 years if he is convicted on both counts at the end of his ongoing trial.

The evangelical pastor, who is originally from Black Mountain, N.C., has lived in Turkey for 23 years and led the Izmir Resurrection Church.

Kalin called on the United States to respect legal process in Turkey in reference to the American pastor's continued detention.

Trump in his first year in office expressed admiration for Erdogan and even congratulated the Turkish leader after a victory in a controversial referendum, but relations between the two countries have been increasingly fraught.

For its part, Turkey would like to see the extradition of Fethullah Gulen, who now lives in Pennsylvania. Erdogan's government has blamed followers of the cleric Gulen for an unsuccessful 2016 coup, leading to a purge of thousands of people from Turkey's civil service, police, military and media and educational institutions, with many of them jailed.

Turkey has also been publicly critical of criminal prosecutions in the U.S. involving state-run Halkbank official Mehmet Hakan Atilla, as well as Reza Zarrab, a Turkish-Iranian gold trader.

The two countries have also been in conflict in Syria's war. Turkey has urged the U.S. to halt its support for Kurdish YPG fighters or risk confronting Turkish forces on the ground in Syria.

Turkey considers the group linked to the Kurdistan Workers Party (PKK) it bans at home, with the Americans using the fighters in its efforts to root out Islamic State in Iraq and Syria (ISIS) militants.

Also on the military front, Turkey's purchase of Russia's S-400 missile defence system has irked the U.S. and other alliance members in NATO.

With files from CBC News