Turkey seeks lower US tariffs under Trump as lira gains strength

Reuters

Turkey expects Donald Trump's White House will lower tariffs on its steel and textile exports, the trade minister said on Nov. 7, as the Turkish lira and assets continued to rally on prospects of new U.S. trade and foreign policies.

"We expect that...customs duties will be reduced in our foreign trade, especially in steel and textile products," Trade Minister Ömer Bolat said on broadcaster AHaber, adding that Turkey's defense and financial sectors could also benefit.

Bolat did not elaborate. Trump has promised to levy 10% tariff on all imported goods, to restrict migration and to quickly end wars taking place to Turkey's north and south, in Ukraine and the Palestinian territory of Gaza respectively.

Trump's sweeping U.S. presidential victory on Nov. 5 helped spark a rally of as much as 0.4% in Turkey's lira, to 34.2 to the dollar, its strongest level since mid-October.

Istanbul's benchmark stock index jumped nearly 3%, marking its best day since May on Nov. 6.

Investors and bankers said any renewed U.S. push for peace could underpin Ankara's 18-month old economic turnaround programme, led by Finance Minister Mehmet Şimşek, which relies in part on foreign inflows to reverse years of soaring inflation.

Bolat said he expected the Trump administration, to begin in January, would benefit Turkey's defense industry needs, despite past U.S. sanctions that were leveled under Trump's first term over Ankara's purchase of Russian S-400 missile defenses.

He also said he expected fallout on banks to ease from Washington's current Russia-related embargoes over Moscow's war in Ukraine.

Trump's promised trade and immigration policies could also leave Turkey relatively unscathed among large emerging market (EM) economies such as Brazil, Mexico and China, bankers said.

"The Turkey trade is a relative outperformer within global EMs with the Trump victory," said Blaise Antin, head of EM sovereign research at asset manager TCW in Los Angeles.

"Yet Turkey is mostly driven by the domestic story and whether Team Şimşek can maintain control over the steering wheel for all of 2025," he added. "If so, then it'll be a very good story for Turkish bonds and the lira."

Turkey's aggressive interest rate hikes to 50% have begun to cool annual inflation to below 50% last month from above 75% in May. The policy turnaround that began in mid-2023 has helped lift net international reserves to $60 billion from -$5.7 billion, boosted in part by a return of foreign investors.