President Donald Trump stepped up the pressure by doubling tariffs on Turkish metal imports, in the latest round of a dispute focused around the terrorism trial in Turkey of a USA evangelical pastor whose freedom Washington is demanding. Trump wrote. "Aluminum will now be 20% and Steel 50%".
Turkey is now under a 25 percent tariff on imported steel and 10 percent on aluminum, which went into effect in March.
He added: "Relations with countries who behave like this have reached a point beyond salvaging". The U.S. was Turkey's biggest export market for steel a year ago, though exports have fallen since.
President Donald Trump administration announced that it would higher the tariffs on Turkish steel and aluminum over the detainment of American evangelical pastor Andrew Brunson, who was arrested in 2016.
Erdogan, who says a shadowy "interest rate lobby" and Western credit ratings agencies are attempting to undermine Turkey's economy, said Turks should exchange their gold and dollars into lira to help the currency.
The Turkish lira fell 13 percent to 6.51 per dollar.
Far worse than that, though, is this has also sent Turkey's currency on a downward spiral that threatens to destroy its entire economy.
Brunson, a United States citizen and Turkish resident for over two decades, was arrested in Turkey on charges of terrorism and espionage.
Hoping to put pressure on the North Atlantic Treaty Organisation ally to free the pastor, the White House sanctioned two top Turkish government officials. A delegation of Turkish officials held talks with their counterparts in Washington this week but there was no sign of a breakthrough.
"This will be the response to those who have declared an economic war", he said, blaming Turkey's woes on what he described as an "interest rate lobby" seeking to push the country to higher rates.
Erdogan called on Turks to not be concerned about exchange rate movements, mockingly declaring "the dollar, the mollar will not cut our path".
Despite Trump's insistence, Turkey has not budged in freeing American pastor Andrew Brunson, who has been detained by Turkey for nearly two years on charges that he was working with a terrorist organization and was a spy.
The lira tumbled about 10 percent on Friday to another record low as investors anxious about Erdogan's unorthodox economic policies and USA sanctions.
"However, I say it once again from here. It is a national fight", he said.
"In most cases though, we suspect that this resilience will prove temporary", they said, highlighting expectations of rising USA interest rates and worries over growing USA protectionism.
The Turkish lira has fallen more than 10% against the dollar after a Turkish delegation in Washington failed to prevent United States sanctions. As the currency drops, Turkish companies and households with debt in foreign currencies see their debts expand.
The day saw the lira plunge as much as 18% at one point, the biggest one-day drop since Turkey's 2001 financial crisis.