An economic power play has sent Turkey's currency into a downward spiral.
The Turkish lira plunged more than 16 percent on Friday, while tensions simultaneously escalated between Turkish President Recep Tayyip Erdogan and President Trump, The Wall Street Journal reported.
Turkey's fragile economy already had investors worried about future financial health, with the lira down 23 percent against the U.S. dollar in the past week. Erdogan seemingly added fuel to the fire when he made a defiant speech on Friday, saying "Turkey won't surrender to economic hitmen" and blaming an "interest rate plot" that amounted to "a military coup attempt."
Trump did not take warmly to Erdogan's declaration of "economic war," announcing on Twitter that he would double tariffs on steel and aluminum. "Our relations with Turkey are not good at this time," Trump wrote.
The declining lira, which is at a record low, could frazzle markets all over Europe, CNN Money reports, especially now that experts expect that Turkey will need to take emergency action. "It's not clear that Turkey will be able to step back from the brink this time around," said William Jackson, an economist at Capital Economics. Summer Meza
During a meeting on Wednesday, President Trump and European Commission President Jean-Claude Juncker promised to work together to lift barriers on trade and eliminate tariffs, Trump announced in the White House Rose Garden.
"We agreed today, first of all, to work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods," Trump said. Having already imposed higher tariffs on European steel and aluminum, Trump had threatened a 25 percent tariff on European vehicles, but Juncker said both sides have agreed to "hold off on other tariffs" during negotiations. Trump also shared that the EU said it will import more U.S. soybeans and liquid natural gas.
"We will not go against the spirit of this agreement unless either party terminates the negotiation," Trump said. "So, we're starting the negotiation right now, but we know very much where it's going." Catherine Garcia
On Monday, President Trump ordered the U.S. Trade Representative to find $200 billion worth of Chinese imports that could be subject to new tariffs.
"China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology," Trump said in a statement. "Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong."
Trump has already ordered tariffs on $50 billion in Chinese goods in retaliation for intellectual property theft, and China has vowed to retaliate on U.S. exports. Trump said the new tariffs will go into effect if "China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced," and added he is willing to pursue "additional tariffs on another $200 billion of goods." Catherine Garcia
With temporary exemptions due to expire at 12:01 a.m. Tuesday, President Trump on Monday postponed a decision on imposing steel and aluminum tariffs on Canada, Mexico, and the European Union until June 1, a person familiar with the matter told Reuters.
This person also said the Trump administration has "reached agreements in principle with Argentina, Australia, and Brazil, details of which will be finalized in the next 30 days." In March, Trump imposed a 25 percent tariff on steel imports and 10 percent tariff on aluminum, but several countries received temporary exemptions and South Korea was given a permanent exemption to steel tariffs, in exchange for agreeing to cut its exports to the U.S. by about 30 percent.
Canada is the largest source of steel imports into the U.S., and Prime Minister Justin Trudeau said on Monday if the U.S. made a move to impose tariffs on his country's steel and aluminum it would be a "very bad idea." Catherine Garcia
The Office of the U.S. Trade Representative on Tuesday proposed imposing 25 percent tariffs on $50 billion worth of Chinese imports.
"This level is appropriate both in light of the estimated harm to the U.S. economy, and to obtain elimination of China's harmful acts, policies, and practices," the office said in its report. The 1,300 products targeted include lithium batteries, dishwashers, semiconductors, and flame throwers. The Chinese Commerce Ministry responded by saying it will soon announce countermeasures to any tariffs.
President Trump has accused China of stealing the intellectual property of American companies; the tariffs are China's punishment. The public can comment on the proposal through May 11. Catherine Garcia
As President Trump prepares to announce Thursday his plans to impose at least $30 billion in tariffs against China, countertariffs are being drafted overseas to specifically hurt states that helped buoy the president to his win in 2016, The Wall Street Journal reports. Focusing on the Farm Belt, China's tariffs could target American soybean, sorghum, and live hog exports, with Chinese companies preparing to turn to Brazil, Argentina, and Poland to meet their supply needs.
"The challenge for any president in tariffs is to ensure that ultimately you don't punish Americans for China's misbehavior," explained Rep. Kevin Brady (R-Texas).
Trump's tariff push comes in response to complaints by American companies that say Chinese companies force them into partnerships in order to obtain their technology, and that Chinese companies receive government money to steal tech secrets. The tariffs would additionally serve as retaliation for Chinese cyber attacks. CNN concluded: "The [Trump] administration's diagnosis is correct, economists say. The remedy is where people differ."
American farmers, for one, are sounding the alarm: "Bottom line, we're terrified," Zaner Group market strategist Brian Grossman, a former North Dakota farmer, told The Wall Street Journal. "It's not going to be good for the American farmer." Jeva Lange
Despite politicians in his own party, like House Speaker Paul Ryan (R-Wis.), calling on him to ditch his plan to impose tariffs on steel and aluminum, President Trump said Monday he's "not backing down."
Last week, Trump surprised everyone by announcing he planned on implementing a 25 percent tax on steel imports and a 10 percent tax on aluminum imports. On Monday, Ryan released a statement saying he was "extremely worried about the consequences" of such a move, and his spokeswoman said there were concerns this would launch a "trade war," with Ryan "urging the White House to not advance with this plan."
A Canadian government official told Reuters that Prime Minister Justin Trudeau called Trump on Monday, letting him know that if he imposed tariffs, it would be a roadblock in ongoing talks on updating NAFTA. Canada is the largest supplier of aluminum and steel to the U.S., and the official said during the call, Trudeau "forcefully defended" his country's workers and industries. Trump was not swayed by Ryan's concern or his conversation with Trudeau; in a meeting at the White House with Israeli Prime Minister Benjamin Netanyahu, Trump said, "We're not backing down. I don't think you're going to have a trade war." Catherine Garcia
Trump's pal Carl Icahn dropped almost a million shares of a steel-dependent company days before tariff talk began
A week before President Trump announced his intention to impose a 25 percent tariff on steel imports, his longtime confidant and one-time adviser Carl Icahn had already cut almost 1 million shares of Wisconsin-based crane manufacturer Manitowoc Company Inc., ThinkProgress reports. The timing of Icahn's $31.3 million dump is suspect, because Manitowoc is a heavily steel-dependent company.
"Commerce Secretary Wilbur Ross publicly released a report on Feb. 16 calling for a 24 percent tariff," notes ThinkProgress. "But, as the chart in the [Securities and Exchange Commission] filing indicates, Icahn started selling his Manitowoc stock on Feb. 12, prior to the public release of that report." Icahn made the SEC filing on Feb. 22.
At the time Icahn began selling off the Manitowoc stock, it was worth $32 to $34 per share. "Although the stock's up 22.4 percent in the last year, shares are down 19.5 percent over the last month," wrote Seeking Alpha in an article pondering "Why Carl Icahn Just Cut His Manitowoc Stake by 33 Percent," published Feb. 28. For comparison, after Trump's tariff announcement, Manitowoc stock was trading Friday afternoon around $26 or $27 per share. Read more about Icahn's sale at ThinkProgress. Jeva Lange