The diplomatic rift between the countries has made the Turkish lira set multiple record lows in the past week.
The euro zone bank sell-off was also exacerbated by a report in the Financial Times that the European Central Bank is increasingly concerned about some lenders, particularly BBVA of Spain, UniCredit of Italy and BNP Paribas of France as they have some of the largest operations in Turkey among euro zone banks.
"Emerging market economies move more aggressively; the knee-jerk reaction is stronger". Financial upheaval there risks further destabilizing an already volatile region.
On June 21, Turkey's retaliatory tariffs went into effect on 4 to 70 percent of more than $1 billion worth of US goods.
He did not offer an explanation for the tariff hike, which raises the tariffs to 20 percent on aluminum and 50 percent on steel, though there are a couple of possibilities. "It could serve as a template for further tariff actions against China if the renminbi depreciates further relative to the dollar, even if that depreciation were mainly a reflection of the relative strength of the US and Chinese economies".
But Turkey's trade ministry said the tariffs were against World Trade Organisation rules.
Brunson, who denies the accusations, could spend the rest of his life in prison if convicted. A delegation of Turkish officials held talks with their counterparts in Washington this week but there was no sign of a breakthrough.
"Do not worry!" He said Turkey was not afraid of "threats" and added Turkey had "alternatives" for economic cooperation in many places "from Iran, to Russian Federation, to China and some European countries".
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.
"This is a domestic and national struggle", Erdoğan said, according to The Associated Press.
"Some countries have engaged in behavior that protects coup plotters and knows no laws or justice", he said.
The dollar rose as exposure to Turkey could impact European banks and spark a domino effect throughout Europe as people begin to pull out of those banks and into the USA, said Gregan Anderson, macroeconomic strategist at brokerage Bulltick LLC.
President Trump's discarding of the Iran nuclear deal is a point of contention, as well, as almost half of Turkey's oil imports come from Iran, meaning new sanctions against Iran come back and hurt the Turkish economy as well.
"Before it is too late, Washington must give up the misguided notion that our relationship can be asymmetrical and come to terms with the fact that Turkey has alternatives".
"Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies".
As the crisis swelled he told his supporters not to worry. "It just shows the importance of the evangelical vote in the U.S.as it heads to midterms".
Iran's Foreign Minister Mohammad Javad Zarif waded into the mounting row between Turkey and the United States, accusing Washington of an "addiction to sanctions and bullying". Gulen denies the allegation. Arrested in 2016, he faces terror and espionage charges.