With the value of the Turkish lira plunging to its lowest level ever, the strain caused among the Turkish economy has affected other nations as well, including the U.S. Matters have only worsened for the country when President Trump doubled aluminum and steel tariffs, prompting Turkish President Recep Tayyip Erdogan’s vow to win the “economic war” against the U.S. Since the recent detainment of an American pastor in Turkey has already tested the two countries’ relations, it is only a matter of time before the most recent impositions affect the rest of the world.
The major decline of the Turkish lira has sent the nation into a frenzy. Friday, Aug. 10, the lira hit an all time low, comparing 5.9976 to the U.S. dollar. President Erdogan addressed his country, stating that “there are various campaigns being carried out...Don’t forget, if they have their dollars, we have our people, our God.” Most recently, on August 14, Erdogan threatened a boycott of U.S. goods in a response to U.S. tariffs.
President Donald Trump and President Recep Tayipp Erdogan greet another at a United Nations gathering. Photo courtesy of the U.S. Embassy and Consulates in Turkey.
Though the two countries are NATO allies, they have had deteriorating relations; there have been disputes about Kurdish forces in Syria in the past two years, and U.S. efforts to convince Turkey to release a pastor detained there have failed. However, troubles are only intensifying. With the U.S. president’s most recent stab at the Turkish economy, the world has been left to wonder how the tension between the U.S. and Turkey will affect other nations.
Though marketing analysts assure that banks will mainly take the brunt of the impact, numerous nations will feel the effects of Turkey’s economic plunge: Europe, Japan, U.S.—everyone. Turkey owes more than $138 billion to European banks and is indebted to billions of dollars with other countries as well.
As for a direct effect on the United States, MarketWatch assures that the trouble in Turkey will not bring ramifications to the Wall Street stock market. However, President Trump’s recent imposition and Turkey’s history with America seem to foreshadow more economic issues to come.
The U.S. has magnified problems in Turkey, but the magnitude of the backlash by President Erdogan is still unknown; he has yet to follow through with his threats. As crisis in the European country is ongoing, other nations are watching with careful eye to see the next turn of events.