US President Donald Trump (center) speaks with Turkish counterpart Recep Tayyip Erdogan (right) and his spokesperson Ibrahim Kalin on July 10, 2018, in Brussels, Belgium. Photo: Benoit Doppagne | AFP
ERBIL, Kurdistan Region — Turkey is announcing massive reforms on Friday in an attempt to throw a life jacket to its drowning economy. Its president has called the situation a “trade war,” while the United States announced high tariffs on Turkish aluminum and steel.
Turkish Finance Minister Bakan Albayrak described the system as a "new economic model," reported state-run Anadolu Agency from Dolmbahce Palace in Istanbul.
"Another of our principles is to provide full independence in monetary policies, added Albayrak.
Economic reforms are necessitated as the Turkish lira struck a 15-year low against the US dollar. Friday afternoon, 6.61 lira equaled $1, compared to 5.55 on Thursday. Five years ago about 2 lira equaled $1.
President Recep Tayyip Erdogan says Turkey is facing "an economic trade war."
"If you have dollars, euros or gold under your pillow, go to banks to exchange them for Turkish lira. It is a national fight," Erdogan said on national TV, AFP has reported.
US-imposed sanction on Iran could affect Turkish markets, especially its energy sector. Ankara depends on Tehran for much of its natural gas.
US sanctions against two Turkish ministers had little impact and were more directed at the release of US Pastor Andrew Brunson. However on Friday, US President Donald Trump announced massive tariffs on steel and aluminum imports.
"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%," tweeted Trump.
"Our relations with Turkey are not good at this time!" added Trump
Earlier in the day, Erdogan blamed the economic woes on an "interest rate lobby" seeking to push the country to higher rates. He dismissed the sanctions, saying the Turkish nation has Allah on its side.
"This will be the response to those who have declared an economic war," he said.
Turkey's state-run Daily Sabah reported Erdogan and Russian President Vladimir Putin held a telephone call on Friday to discuss the situation and regional issues including Syria. The countries' foreign ministers also spoke, according to Turkey.
Responding to Trump's announcement, Turkey says it does not take the president's tweet seriously and his tariffs are in violation of World Trade Organization rules.
Turkish Foreign Affairs Spokesperson Hami Aksoy said "sanctions and repression" will not achieve anything, but only harm the allies' relationship.
He vowed that Turkey would give a "necessary response."
Aksoy urged diplomacy, dialogue, and mutual understanding to resolve the issues.
Last updated at 10:04 p.m.