ISTANBUL • Turkey has increased tariffs on imports of several key US products in retaliation for American sanctions against Ankara, as a bitter dispute between the two allies that has battered the Turkish lira showed no signs of ending.
The lira - which lost just under a quarter of its value in trading last Friday and Monday - continued to claw back some ground on financial markets, rallying around 5 per cent against the dollar.
But a court rejected an appeal for the release of American pastor Andrew Brunson - whose detention for almost two years sparked the crisis - leaving no immediate solution to the Turkey-United States row in sight.
The lira's fall had raised fears that Turkey was on the verge of a full-fledged economic crisis, especially in its banking system, that could spill over into Europe and other markets.
Turkish Vice-President Fuat Oktay said that the tariff increases were ordered "within the framework of reciprocity in retaliation for the conscious attacks on our economy by the US administration".
President Donald Trump had previously announced that the US was doubling steel and aluminium tariffs on Turkey.
The hikes were published in Turkey's Official Gazette in a decree signed by President Recep Tayyip Erdogan, who has repeatedly described the crisis as an economic war that Turkey will win.
The tariff increases amount to a doubling of the existing rate, the state-run Anadolu news agency said, in an apparent parallel response to Mr Trump's move.
The decree said the move brought tariffs to 50 per cent on imports of US rice, 140 per cent on hard alcoholic drinks like spirits, 60 per cent on leaf tobacco and 60 per cent on cosmetics.
Trade Minister Ruhsar Pekcan said Turkey had doubled tariffs on 22 products imported from the US, saying the tariffs were together worth an additional US$533 million (S$735 million).
Mr Erdogan's spokesman Ibrahim Kalin said: "Turkey is not in favour of an economic war with anyone but when attacked... will take all necessary steps."
On Tuesday, Mr Erdogan said Turkey would boycott US electronic goods such as Apple's iPhone, even though he had been photographed repeatedly using one.
He also made his famous speech on the night of the July 2016 failed coup calling citizens out into the streets through Apple's FaceTime video-calling technology.
Mr Michael Hewson, chief market analyst of CMC Markets in Britain, warned that the Turkish tariff hikes risked provoking a new reaction from Mr Trump and ultimately add to downward pressure on the lira.
"President Erdogan appears to be playing a dangerous game if he thinks he can come out on top in this spat with the US," he said.
As a court in the western Turkish city of Izmir rejected a new appeal to free Brunson yesterday, Mr Kalin said the US needs to be respectful of the judicial procedures in Turkey.
Mr Erdogan has warned that Turkey could seek alternative partners, pointing to Ankara's strong ties with Russia, Iran and China.
"The US is our major trade partner, but it is not the only one," said Ms Pekcan.