Feb 21 2018

Turkey threatens retaliation as U.S. mulls steel tax

Turkey is considering retaliatory measures against the United States should Washington impose taxes on its steel exports, Economy Minister Nihat Zeybekçi said, raising the prospect of further political tensions between the two NATO allies.

"If they (Turkish producers) complain about U.S. measures, then we will look at the situation and are more likely to take retaliatory measures,” Zeybekçi said late on Tuesday, according to Turkey’s government-run news agency, Anadolu.

The U.S. Department of Commerce released recommendations to President Donald Trump last week for new restrictions on steel imports. The options include a blanket 24 percent tax on all imports and a minimum 53 percent tariff on products from 12 countries including Turkey, China, Russia and Brazil.

Turkey already feels singled out by possible U.S. measures against its financial system, U.S. support for Syrian Kurdish militia and over arms exports.

Regulators in Washington are considering financial penalties against at least one Turkish bank for contravening sanctions on Iran. Western countries including the United States are also limiting the sale of some weapons to Turkey, including guns for government bodyguards, Turkish President Recep Tayyip Erdoğan has said. Congress is also being asked to consider barring Turkey from purchasing F-35 steatlh aircraft.

Trump, seeking to grow the domestic steel workforce, has until April 11 to decide the course of action. “Substantial tariffs" were a possibility, he told lawmakers on Tuesday, according to Business Insider.

But U.S. action raises concern that such measures could lead other countries to place new restrictions on U.S. exports, prompting a trade war that might mean the taxes will damage the U.S. economy rather than benefit it.

"I would urge us to go very, very cautiously here," Senator Pat Toomey told Trump on Tuesday, Business Insider said.

Political leaders such as Erdoğan and Russian President Vladimir Putin could also use the tariffs to drum up anti-U.S. sentiment at home, a ploy that helps increase their popularity and hurts U.S. diplomatic and economic influence to the benefit of other nations such as China.

Crude steel production in Turkey climbed to an all-time-high of 37.5 million tons last year, according to data from the Turkish Steel Producers Association (TCUD). Major Turkish steelmakers include Erdemir, Kardemir and MMK-Atakaş Metallurgy.