Erdoğan reverses tax hikes on U.S. imports after Trump cuts steel tariffs

Turkish President Recep Tayyip Erdoğan reversed a decision made in August last year that doubled import tariffs on U.S. goods.

The decree by Erdoğan was published in the Official Gazette on Wednesday. It is valid as of May 21, he said.

Turkey increased the taxes on items such as cars, cosmetics, tobacco and alcohol on Aug. 14 in response to Trump’s own doubling of U.S. duties on Turkish steel and aluminium. Trump reversed the steel tax in a decision last week.

The United States and Turkey have been embroiled in political spats over issues including U.S. support for Kurdish militants in Syria and Turkey’s planned purchase of Russian S-400 missiles for well over a year. Trump’s imposition of the tariffs on Turkish steel was made after Turkey detained a U.S. pastor on terrorism charges and refused to release him.

The increased U.S. taxes on steel and a measure barring some Turkish ministers from the United States helped plunge Turkey into a currency crisis last summer. A Turkish court released Brunson in October, leading to a temporary rally in the lira.

Washington is now threatening new sanctions on Ankara for its purchase of the S-400s, which are slated for delivery in July, and has suspended its involvement in a programme to build F-35 fighter jets. The political impasse is hurting prospects for Turkey’s economy, which slumped into recession in the second half of last year. Ankara blames the new U.S. threats on hawks in Washington and hopes that Trump will refrain from implementing such measures.

The lira has dropped about 13 percent against the dollar this year after losses of 28 percent in 2018. Inflation stands at almost 20 percent and consumer confidence is now at the lowest levels since records began in 2003.

The lira dropped 0.5 percent to 6.08 per dollar at 11:22 a.m. local time in Istanbul.

Reuters and other media reported on Tuesday that Turkey would reduce the tariffs on U.S. goods in a reciprocal move this week.

The higher charges on U.S. goods had included duties on cars of 120 percent. Rates were 140 percent for passenger cars, 60 percent for cosmetic products and 50 percent for plastic.