Turkey announced on Wednesday it was working to increase tariffs on imports of some US products, which led to escalating dispute with the United States, provoking the Turkish currency to record a new historic low.
In a decision announced in the official gazette, Ankara said it would impose an additional tariff on imports of products, including rice, vehicles, alcohol, coal and cosmetics. Tariffs on US cars have doubled to 120 percent while tariffs on alcoholic beverages doubled to 140 percent.
The decision to impose new tariffs came a day after Erdogan said Turkey would boycott US electronic goods, including iPhones. He suggested that Turks buy local or Korean phones instead.
The Turkish lira has fallen to record lows in recent weeks, losing about 42% so far this year.
The USD/TRY pair traded at 6.20 lira on Wednesday after the government took steps to shore up the currency by lowering the daily limit on foreign exchange transactions, and amid reports that the finance minister would address foreign investors on Thursday.
Investors are concerned not only about Turkey's poor relations with the long-standing NATO ally, but also the economic policies of Turkish President Recep Tayyip Erdogan and the country's high external currency debt. Turkey has accused the United States of launching an "economic war" as part of a plot to harm the country’s stability.
Washington has imposed earlier this month financial sanctions on two Turkish ministers and doubled steel and aluminum tariffs on the country, while US President Donald Trump is trying to secure the release of Andrew Brunson from Turkish prison, a US priest charged with espionage and terrorism-related charges.