US President Donald Trump dramatically increased the pressure on Turkey on Friday, threatening to double tariffs on the country's aluminium and steel exports, leading to a fresh slump in the already tumbling lira.
The Turkish lira dropped as much as 18 per cent at one point after Mr Trump's announcement - the biggest one-day fall since a 2001 financial crisis in the country.
Turkey's currency crisis has lurched on to the global stage, denting European and USA stocks as fears of contagion rise.
To understand how all of these pieces fit together, we'll start with some basic facts about trade between the United States and Turkey.
The lira's value fell about 13 percent against the dollar on Friday.
Trump struck a vengeful note, announcing, "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 our very strong Dollar!"
The New York Times suggested that Trump could also be trying to offset the effects of Turkey's weakened currency on the existing tariffs.
"Unfortunately, our words have fallen on deaf ears, and American weapons ended up being used to target civilians and members of our security forces in Syria, Iraq and Turkey", he said.
Turkey's demand the United States extradite Islamic cleric Fethullah Gulen, who Ankara has said orchestrated a failed 2016 military coup against Erdogan is another sore point between the two countries.More news: Oscars to shorten run-time, add popular film category
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"As he stated, the President has authorized the preparation of documents to raise tariffs on imports of steel and aluminum from Turkey", said White House spokesperson Lindsay Walters. The White House said he had authorised them under Section 232 of U.S. trade law, which allows for tariffs on national security grounds.
Turkey said the tariffs were against the rules of the World Trade Organisation (WTO).
The two North Atlantic Treaty Organisation allies have been at odds since the coup attempt, which Ankara accused US-based Fetullah Gulen and his FETO of masterminding.
"President Erdogan's strengthened powers under the new presidential system have made it increasingly uncertain whether policymakers will be able to act to stabilise the economy", said William Jackson, chief emerging markets economist at Capital Economics in London.
In what appears to be a diplomatic riposte, Turkey later said Erdogan had held a phone call with Russian President Vladimir Putin to discuss economic ties.
Erdogan said Washington had taken steps to escalate tensions with Ankara on the pretext of the arrest of American pastor Andrew Brunson, who is under house arrest for charges of aiding a terrorist organization. The president, who says a shadowy "interest rate lobby" and Western credit ratings agencies are attempting to bring down Turkey's economy, appealed to Turks' patriotism.
"Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks". This is a national struggle. Turkey wants Brunson to stand trial.
Turkey and the US are now experiencing rocky relations following Washington's imposition of sanctions on Interior Minister Suleyman Soylu and Justice Minister Abdulhamit Gul for not releasing American Pastor Andrew Brunson, who faces terrorism charges in Turkey.
"Confidence needs to be regained".
Albayrak, who formerly served as energy minister, on Friday announced what he has described as a "new economic model" for Turkey but he focused on macro-economic issues and steered well clear of tackling the currency crisis.