Trump brought tariffs on $140 billion, but Turkey is different
U.S. President Donald Trump’s America First policies have resulted in tariffs on more than $140 billion of goods, but his steps against Turkey are different because unilateral U.S. action is being applied to an economy already beset by serious problems, said Stephanie Segal, senior fellow at the Center for Strategic & International Studies (CSIS).
The resulting market reaction to U.S. measures designed to free pastor Andrew Brunson is precisely the intention of Trump’s action: to create the leverage to persuade President Recep Tayyip Erdoğan to release Brunson, Segal said.
Still, Turkey’s economic problems are homegrown: the IMF has warned that Erdoğan’s economic policies caused “clear signs of overheating” and Erdoğan has appointed his inexperienced son-in-law to take charge of the treasury and finance ministry and compromised the central bank’s independence, she said. As a result, investors are reluctant to give Erdoğan the benefit of the doubt.
“Of greater geostrategic importance, the United States appears also to be ratcheting up pressure on Turkey to curb its economic ties with Iran, with reports that Washington has encouraged Ankara to buy oil from Saudi Arabia instead of Iran,” Segal said. “For sure, the approach puts considerable pressure on Turkey and Erdoğan to comply; but it also presents the very real risk of spillovers, placing more than just the Turkish economy at risk.”
The International Monetary Fund’s door is also closed to Turkey until relations with the United States improve. It’s also difficult to see how a large IMF bailout would be available to Erdoğan because it would require policies that provide a reasonably good chance of success, Segal said.
“Such capacity (from Turkey) is not currently on display,” she said. “Nor would Turkey receive support from the United States—in the IMF board or elsewhere—so long as Turkey defies U.S. demands.”