Published: Tue, August 14, 2018
Finance | By Loren Pratt

Erdogan says Turkey to 'boycott' iPhones and other US electronic goods

Erdogan says Turkey to 'boycott' iPhones and other US electronic goods

President Tayyip Erdogan said on Tuesday Turkey would boycott electronic products from the United States, retaliating in a row with Washington that helped drive the lira to record lows.

Last Friday, President Donald Trump doubled tariffs on aluminum and steel imports from Turkey.

Unfazed by Turkey's escalating economic turmoil, Erdoğan suggested he would snub US-made iPhones in favour of other mobile brands produced domestically or in other countries.

Worry about the currency crash has sparked fears over the risk of economic "contagion" in Europe. Here's what Americans should know.

What's happening to Turkey's currency?

As Breitbart News reported, Turkey faces "the very real risk of USA sanctions" if it does not free American pastor Andrew Brunson, arrested on dubious charges of aiding Marxist and Islamist terrorist groups. Arrested in 2016, Brunson faces terror and espionage charges.

The currency has nosedived over the past week, accelerating a months-long decline that has seen it drop 45 percent this year.

"There are economic terrorists on social media", Erdogan told a gathering of Turkish ambassadors at the presidential palace in Ankara, adding that the judiciary and financial authorities were taking action in response.

The Turkish envoy conveyed the message the pressure and threats would only lead to a "chaos" in relations which could only improve after Washington abandons the language of "threats", said Turkey's foreign minister Mevlut Cavusoglu.

The Russian foreign minister claims that the USA increased use of sanctions will erode the dollar's role as the top reserve currency. That draws capital away from Turkey, weakening the currency.

In essence, investors have lost faith in the current economic policies of the Turkish government, anxious that a continued weakening of the economy will cause Turkish borrowers to struggle to repay their foreign debts.

What about the Turkish economy?

If anything, the drop in the lira is making us a lot more money right now, so we're not anxious about it at all!”. Prices are already up 16 percent since a year ago, according to the Associated Press.

Government bonds rallied and the lira surged from local retail accounts sold dollars to take profit after the currency slid nearly 30 percent against the greenback over the past month. They get revenues in lira, which are worth less and less, but must repay loans in dollars or euros.

Does this have effects outside Turkey? Argentina's central bank unexpectedly raised interest rates by 5 percentage points on Monday. Finansbank is the fifth-largest privately-owned bank by assets in Turkey.

"But there will be a price [which] those who're waging an economic warfare against Turkey will also pay". Other countries have much less exposure.

What does this mean for Americans?

The lira's weakness has rippled through global markets. But American companies' direct contact with the Turkish economy is quite limited. By size, Turkey is America's 32nd-largest trading partner, and US banks have little invested in Turkey, making up less than one percent of all foreign lending.

"Germany would like to see an economically prosperous Turkey". "Even if all these claims were to be written off-they won't be-the impact on the USA banking system would be minimal".

Turkey's market carnage rippled across emerging markets, sending both stocks and currencies toward their lowest levels in a year.

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