When President Trump talks about increasing tariffs on other countries, the usual concern is how much it’s going to hurt domestic workers. In the trade war with China, for example, China has been able to re-source most of their purchasing to other countries, dropping the market value of American commodities like soybeans and lobster. They’re “sanctions on American workers” as much as they are “tariffs on other countries.”
Turkey is not in that position. When President Trump has threatened sanctions on President Erdogan of Turkey, a man Trump has been very friendly toward, it threatens that country’s economy. It seems that recent events have soured President Trump on Erdogan, and he decided to pile on. (NBC)
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! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!
— Donald J. Trump (@realDonaldTrump) August 10, 2018
This is not necessarily a bad thing. Turkey, a longtime ally of the United States, has been increasingly belligerent throughout Erdogan’s rise to power. The Turkey of today is not equivalent, in foreign or domestic policy, to the pro-Western Turkey from the decades where military leaders were directly influencing the political ones. They have gone from dependable ally to regular adversary.
That said, the international economy is linked at this point. The collapse of the Lira on Friday, losing 20% of its value against the US Dollar, will likely trigger aftershocks in markets throughout the world… including the American markets. (The National)
Whether Trump and Erdogan maintain their newly-frosty relationship status is uncertain, so it is unwise to make long-term predictions about it. It is known, however, that Erdogan is attempting to maintain a strong image for his people. That renders his potential decisions dangerous, and deserving of extra scrutiny.
Countries can be brought to their knees by bad economic policy. That is a lesson that the current “don’t even tax, just spend” while attacking free markets American leadership should take to heart.
