As President Trump doubles tariffs on Turkey because of their currency devaluation, Turkey has turned to Russia.

President Trump tweeted this morning:

I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!

The Turkey ETF TUR has fallen -50% since the start of 2018 which means Turkey is in a bear market.

Turkey ETF chart

Turkish policymakers changed reserve rules to bolster the banks’ foreign-exchange liquidity, which many analysts argue is insufficient to support the decline in the lira.

The Turkish lira has plunged 20% versus the US dollar after President Trump authorized the doubling of metals tariffs on Turkey.

Volatility in Turkish lira has greater potential to cause contagion, says strategist from CNBC.

Turkey’s Erdogan said, “We are facing economic attacks today, and we need to defend our country. The economic attack against us now is the same as the coup attempt against us. I’m urging our country to increase outputs, to increase exports.”

The sharp drop in Turkey’s markets came after a delegation returned from Washington with no progress on the detention of U.S. pastor Andrew Brunson.

Erdogan’s is not very smart. He just made Andrew Brunson worth billions in terms of the value of Turkey’s markets. Erdogan arrested one too many people when it comes to American pastor Brunson.

Erdogan is so crazy that he told Turkey citizens this morning to, “Sell dollars and gold and buy lira.” The lira is plunging in value and the only assets holding their value are US dollars and gold, and Erdogan tells citizens to sell those assets and to buy the free falling lira? I can imagine that many Turkish people are thinking screw you Erdogan.

Russia Turkey Relations Grow

Turkey is buying the S-400 air defense system and more Russian energy.

Already, Russia and Turkey have united on the Akkuyu, the $20 billion project which will be Turkey’s first nuclear reactor, expected to supply the country with 10 percent of its energy needs. As part of the joint agreement, Russian nuclear energy company Rosatom provided the financing for Akkuyu in exchange for 51 percent ownership. The two countries are also building the Turkstream pipeline to transport Russian gas to Turkey. Russia is already the largest supplier of natural gas and the third largest supplier of oil to Turkey.

Tariffs and Sanctions Catalyst For New Anti-US Alliances

President Trump’s heavy hand towards putting sanctions and tariffs on countries is causing a major geo-political shift in alliances. Erdogan is working towards better relations with Russia so that he can take Turkey out of NATO. After all, why do you need protection from Russia (NATO’s main selling point), when you are friends with Russia? As the US pushes NATO countries to pay for a larger share of their protection, I don’t think Turkey will agree to pay more.

US ambassador to NATO: We are worried about Turkey and Russia from CNBC.

I predict that Turkey will leave NATO and become closer to Russia. The alliance will be Russia, China, North Korea, Turkey, Iran, and Syria. Russia will continue to work on flipping France and Germany over to their alliance.

The more tariffs and sanctions President Trump puts on countries, the stronger the Russia, China, North Korea, Turkey, and Iran alliance will become.

Turkey In The News