Turkey on Wednesday intensified its clash with the United States, announcing heavy new tariffs on some American products including cars, alcohol and tobacco.
Turkish Vice President Fuat Oktay said on Twitter that the measures were in response to “the deliberate attack of the US administration on our economy.”
The Turkish government has doubled its retaliatory tariffs on American cars to 120% and on alcoholic drinks to 140%, according to a notice published Wednesday. Other affected products include fruit, coal, makeup and rice.
Relations between Washington and Ankara have rapidly soured in recent weeks over Turkey’s detention of the American pastor Andrew Brunson.
The Trump administration announced plans last week to double US tariffs imports of steel and aluminum from Turkey. On Wednesday, a Turkish court rejected a second appeal to release Brunson.
The political spat with Washington has added to pressure on Turkey’s currency, the lira, which has plunged against the dollar.
Turkish President Recep Tayyip Erdogan has accused the United States of stabbing Turkey in the back and on Tuesday called for a boycott of US electronics products.
In June, Turkey imposed a first wave of tariffs on US exports, worth a total of $1.8 billion, in retaliation for President Donald Trump’s initial tariffs on steel aluminum. The products targeted Wednesday are the same as in June.
“Turkey is not in favor of an economic war, but we cannot remain with no reaction if there is an attack on us,” Ibrahim Kalin, a Turkish presidential spokesman, said Wednesday.
The amount of products affected by the tariffs the two countries have imposed on one another are a relatively small part of the $19 billion of goods they traded last year, according to US data.
The lira strengthened for a second consecutive trading session on Wednesday, with gains for the day reaching 6% in morning trade in Europe. The currency is still down more than 35% against the dollar in 2018.
The diplomatic dispute with the United States is just one of the factors that has hammered the Turkish currency.
Investors have also been unnerved in recent weeks by a lack of action by the Turkish central bank, which shocked markets last month when it declined to hike interest rates in the face of rampant inflation.
Critics said the decision smacked of interference by Erdogan, who indicated during the recent presidential campaign that he wanted more control over central bank policy and described interest rates as “the mother and father of all evil.”
Although Erdogan says he opposed interest rate hikes, he has not made a clear argument for why Turkey’s central bank should keep rates low.
The central bank announced a handful of marginal measures designed to reassure investors on Monday. But analysts are calling on the central bank to deploy much more of its firepower.
One dollar bought just seven lira at one point this week, compared with fewer than four at the start of the year.
“No matter how much money we make it finishes because the prices are going up. Fruit and vegetable prices are going up,” said Sevim Pektas, a housewife, told CNN this week. “I do not understand how retired people or people earning minimum wage can afford their rent.”
— Isil Sariyuce, Gul Tuysuz and Charles Riley contributed to this report.
CNNMoney (Hong Kong) First published August 15, 2018: 1:11 AM ET