Trump Is Like A Mad Dog

Friday was a bad day on Wall Street-- and on stock exchanges around the world. Why? After all, Marco Rubio, who once said that Trump was so mentally unstable he couldn’t be trusted with the nuclear launch codes, has now reminded fellow Republicans that "he’s had the nuclear codes for a year and a half, and we’ve been all right." So what could have roiled the markets so badly? The DOW was down 196 points, snapping a five-week winning streak. The Wall Street Journal: "The Turkish lira plunged to its lowest level ever on worries about Ankara’s stability, sending tremors through Europe and emerging markets amid renewed jousting between the country’s leader" and Señor Trumpanzee. Señor Trumpanzee, the world's worst deal-maker ever.

I first discovered Turkey in 1969. I fell in love with the country and I've been back a dozen times, not just to Istanbul but to every part of the large diverse and very pro-American country. At least it was pro-American until the orange orangutan showed up on the scene. I'll get to that in a moment. The first time I went to Turkey I drove in from Bulgaria and headed right for the wonders of Istanbul. I was headed to Iran and on the way spent time in Ankara, Kirikkale, Sinop, Trabzon, Ezurum and, at the bottom of Mount Ararat, where Noah landed his Ark, Dogubayazit, from where I drove across the border into Iran. Since then I've been all over the country: Bodrum, Marmaris, Pamukkale. Izmir, Antalya, Konya, Canakkale and, of course Cappadocia. I'd love to get into all the love affairs I've had in Turkey-- almost 50 years worth-- but I don't want to bore you. Let me just say that I love Turkey-- the sights, the people, the food, the music, the hospitality, the countryside, the cities... And I know the country. It doesn't feel foreign to me. Leave it to Trumpanzee to fuck it all up.

Turkey fought on our side in World War II and then sent troops to back up Americans in the Korean War and more recently in the 2011 Libyan civil war. The U.S. has the most NATO troops (5,745,000). Guess who number two is. Spoiler: not Germany (180,676) or France (222,215) or the U.K. (205,851). If you guessed Turkey (920,473), you win all the dolma you can eat and a gözleme.

You can probably imagine how I felt when I saw this Washington Post headline today: "Trump takes aim at Turkey, announcing doubling of steel and aluminum tariffs in effort to punish country." Or how about this one from the New York Times: Trump Hits Turkey When It’s Down, Doubling Tariffs. Turkey's in the middle of an economic crisis. So Trump decided to attack. It's beyond belief. "Trump’s abrupt and unilateral action came amid worsening relations with Turkey... primarily aimed at punishing Turkey over its failure to return the American pastor, Andrew Brunson, the decision spooked markets and raised the possibility that he could similarly raise tariff rates on other trading partners that have seen their currencies fall against the strengthening dollar, most notably China. Mr. Trump has already threatened to increase tariff rates on $200 billion worth of Chinese goods to 25 percent from 10 percent, in part because of sharp decline in its currency."

Trump’s mention of the currency suggested he is concerned that a rapid depreciation in Turkey’s currency has essentially mitigated the effect of his tariffs. Since a weaker currency makes it less expensive for countries to export their goods, the tariffs carry less punch. By doubling the rate, Mr. Trump’s levies will continue to hurt Turkish metal exporters.

Chad Bown, a senior fellow at the Peterson Institute for International Economics, said the president’s move sent a “worrisome” signal to the world.

“He is tweeting that when a crisis emerges-- which could happen in Turkey-- his gut instinct is to exacerbate the problem by imposing more tariffs, instead of stepping in with leadership to help resolve the emergency,” Mr. Bown said.

Ruhsar Pekcan, the Turkish minister of trade, said Turkey was “deeply disappointed” by the decision to double the tariffs. “The tariffs were groundless when they were announced in June, and remain so now,” Mr. Pekcan said.

“The effects of this ill-advised action by the U.S. Administration will not only impact Turkey, but will prove detrimental to American companies and workers as well,” he added.

Turkey ships little aluminum to the United States, but it is America’s sixth largest foreign supplier of steel. American companies that source metals from Turkey are bracing for a further impact, after already seeing their prices rise this year as a result of the tariffs.

Joseph Casucci, the chief executive of FJM Ferro Inc, which erects steel columns for large residential and commercial building projects on the East Coast, said he expected the president’s decision to further push up the price of steel rebar, of which Turkey is a major supplier. That will put further financial pressure on a range of companies involved in construction, especially mom-and-pop shops that have less ability to stockpile materials, he said. His company has already seen steel costs rise by 35 percent to 50 percent this year.

“I’d love to know when these tariffs are going to subside. That’s the big question in my industry, when does this end?” he asked. “It becomes challenging.”

In his tendency to mix trade goals with other political concerns, Mr. Trump has deviated from decades of government practice. He suggested earlier this year that he might soften his trade approach to China in return for Beijing’s help in dealing with the North Korean regime, and repeatedly tied Mexican trade practices with immigration issues.

Ross Wilson, the former ambassador to Turkey, said that while past administrations had used economic tools to accomplish foreign policy goals, the president’s use of a specific tariff threats was unprecedented.

...Trump has in the past accused China, the European Union and others of manipulating their currencies to make their exports cheaper for Americans to buy. Mr. Trump strongly warned China against further depreciation of its currency as part of a flurry of early-morning tweets several weeks ago.

But the plunge in Turkey’s currency has been triggered by markets, rather than the intervention of politicians seeking to artificially hold their currency down. The lira has fallen more than 40 percent against the dollar this year, as investors’ fears rapidly escalated that the country would not be able to pay its debts.

Eswar Prasad, an economist at Cornell University, said the use of tariffs in this scenario set “a worrying precedent for future trade sanctions that could be triggered by purely market-driven changes in exchange rates.”

“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 U.S. and Chinese economies,” Mr. Prasad said.

The currencies of other emerging markets slumped in response to Turkey’s sell-off Friday. South Africa’s rand dropped more than 2.5 percent. Argentina’s peso fell by about 4 percent. The currencies of Russia, Brazil and Mexico all dropped by more than 1 percent, according to FactSet data.

On Friday, Mr. Erdogan appealed directly to Turks, asking them to use any dollars, euros or gold they owned to purchase domestic currency. The Turkish lira plummeted against the dollar Friday, dropping by more than 13 percent.

Stock markets in the country dropped by more than 2 percent on Friday. Prices for Turkish government bonds fell, pushing interest rates sharply higher. The yield on the 3-year lira-denominated Turkish government bond has risen to more than 23 percent in recent days. At the start of the year, the bond was yielding around 10 percent, according to Bloomberg data.

Trump claimed, incongruously, that he has "a little conflict of interest, because I have a major, major building in Istanbul ... It’s called Trump Towers. Two towers, instead of one. Not the usual one, it’s two. And I’ve gotten to know Turkey very well." He doesn't have squat in Istanbul. Turkish billionaire Aydın Doğan has a licensing deal to use Trump's name for the 2 Şişli towers, one commercial and one residential, the first Trump towers in Europe because his name is so toxic there. It became toxic in Turkey as well and Doğan has been trying to get out of his deal so he could take off the Trump monicker, something President Erdoğan has been urging ever since Trump started making anti-Muslim statements. Many observers say Trump's personal business dealings in Istanbul have far more to do with the trade war he started with Turkey than Andrew Brunson.

From the Trump Organization website