International, Page 18 Erdogan on a slippery slope as run on forex hits Turkish banks
PRESIDENT Donald Trump is embracing financial market pain to get what he wants around the world, showing again the penchant for turmoil that is his trademark in US politics.
His decision on Friday to double steel and aluminium tariffs on a Turkish economy already reeling from a currency crisis came just days after imposing new sanctions on Russia, creating market havoc in both countries. Most Asian markets ended down for the week amid the US-China tariff war.
Rather than worrying about US markets becoming infected by sell-offs elsewhere, Trump is cheering on the economic losses suffered by the targets of US tariffs and sanctions.
Turkey’s lira is sliding “rapidly downward against our very strong dollar!” Trump said on Twitter on Friday as he ratcheted up tariffs on its metals exports.
Just a week ago he said on the same platform that duties he imposed on China were “working far better than anyone ever anticipated,” celebrating a decline in the Chinese market while adding that the US “market is stronger than ever”.
The broadsides suggest that Trump is unfazed by disorder in overseas markets and hopes the routs force foreign capitals to bend to his will. Reinforcing his approach are Trump’s favourite benchmarks – the US stock market and employment figures – which continue to boom. Despite some spillover, the Standard & Poor’s 500 Index remains close to an alltime high set earlier this year.
Turkish President Recep Tayyip Erdogan pledged that the US economic actions wouldn’t shape Turkey’s actions in a New York Times op-ed published on Friday, saying his country “established time and again that it will take care of its own business if the US refuses to listen” and that Trump’s unilateral actions would only undermine American security interests.
“Before it is too late, Washington must give up the misguided notion that our relationship can be asymmetrical and come to terms with the fact that Turkey has alternatives,” Erdogan wrote.
Big Risks
“Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies.”
Trump has ushered in the exact kind of disruption he likes to cultivate. Yet economists question whether the strategy will achieve durable results.
“He likes brinkmanship. He likes to push people to the edge of their comfort,” said Douglas Holtz-Eakin, the former chief economist for President George W Bush’s Council of Economic Advisers who is now president of the American Action Forum. “There are big risks with this approach.”
Disturbances from Trump’s strong-arm tactics could spread between markets.