An Evaluation of the Impact of US Tariffs on Turkish Trade and Economy

This report evaluates the impact of US tariffs on Turkish steel and aluminum exports. The United States imposed tariffs on these products, leading to increased prices and decreased demand in the US, which reduced the revenue of Turkish steel and aluminum sectors. The report analyzes the overview of the US tariffs, the impact on imported goods, and the trend of crude steel production in Turkey. The imposition of tariffs resulted in a trade deficit and potentially contributed to a recession in Turkey. Despite a subsequent reduction in tariffs, the negative impact on the Turkish economy persisted, as evidenced by the continued decline in steel production. The report concludes that the high tariff rates significantly affected the Turkish economy.

Running head: IMPACT OF THE IMPOSITION OF TARIFFS BY THE UNITED STATES
ON TURKEY
IMPACT OF THE IMPOSITION OF TARIFFS BY THE UNITED STATES ON TURKEY
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IMPACT OF THE IMPOSITION OF TARIFFS BY THE UNITED STATES ON
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Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Overview of the U.S. tariffs on Turkey’s exported goods.....................................................2
Impact of tariff imposed by the U.S. on imported goods from Turkey.................................2
Trend Analysis of production of crude steel in Turkey.........................................................3
Conclusion..................................................................................................................................4
Reference....................................................................................................................................5

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IMPACT OF THE IMPOSITION OF TARIFFS BY THE UNITED STATES ON
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Introduction
According to the theory of economics, if a country levy a tariff on the imported
goods, then the tax, which is implemented, is known to be a tariff. Suppose, when a domestic
country has imposed the tariff on the goods, which are imported from the foreign country,
then the price of the exported goods of the foreign country increases. Hence, this results in
the fall in the revenue of the foreign country (Elsheikh, Elbushra, & Salih, 2015). Trade
restrictions usually favour the capital-abundant countries. This report evaluates the impact of
U.S. tariffs on imported steel and aluminium products of Turkey.
Discussion
Overview of the U.S. tariffs on Turkey’s exported goods
Trump, the president of the United States recently during 1st March 2018, declared
that he would impose tariffs both on steel as well as aluminium imports. He added that for
steel imports, he would implement 25 per cent tariff whereas, for aluminium, he would
impose 10 per cent tariff. The imposition of these taxes came into effect on March 8, 2018.
Earlier United State had imposed 50 per cent tariff on the steel and aluminium products
imported from Turkey (Thesun.co.uk., 2019). However, the United States recently planned of
sledging down the tariff rate to 25 per cent on the steel and aluminium products, which are
imported from Turkey. The decision regarding this came into effect on 17th May 2019. The
reason behind the decision was that the high tariff violates the international trade laws under
the World Trade Organization (WTO) agreements.
Impact of tariff imposed by the U.S. on imported goods from Turkey
The United States majorly import steel and aluminium products from Turkey. Earlier
when the United States imported steel and aluminium from Turkey, they imposed around 50
per cent of tariffs on those mentioned goods. As a result, the price of steel and aluminium

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IMPACT OF THE IMPOSITION OF TARIFFS BY THE UNITED STATES ON
TURKEY
products in the United States increased. Hence, the domestic demand of the United States
economy fell. The revenue of the steel and aluminium sectors operating in Turkey decreased.
As a result, there is a trade deficit in the country, which reduced the international reserves.
This, in turn, reduced the national income of Turkey. Since one of the major exporting
markets in Turkey is steel and aluminium sectors. Consequently, Turkey had suffered from
losing two of its major exporting industries for the final product of aluminium and steel and it
happened rapidly overnight. Therefore, the economy of Turkey resulted in a recession.
Trend Analysis of production of crude steel in Turkey
Figure 1: Trend analysis of steel production in Turkey
(Source: Celik.org.tr., 2019)
The chart portrayed above explains the trend pattern of steel production in Turkey.
The horizontal line indicates the vertical axis indicates the time span and the production of
steel. The time span is taken from 2018 to 2019. Due to a fall in 50 per cent in the steel
exports, there is a drastic drop in the World's biggest market for raw materials. There is about
16.1 per cent drop in the production of crude steel in the first two months of 2019
(Celik.org.tr., 2019). Before the time of imposing a tariff, there was a slight increase in the

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production of crude steel. However, after the implementation of 50 per cent tax, the crude
steel continued to fall.
The high tariff rate not only affected the economy of Turkey but also affected the
economy of the United States. The reason behind this is that this tariff increased the cost of
production of the manufacturing industry that uses raw materials imported from Turkey. Due
to the reason as mentioned above, Turkey raised a complaint to the World Trade
Organization, against the high-imposed tariff on the steel and aluminium products by the
United States. It was because of the complaint, which was mentioned above, the United
States was forced to cut down the tariff rate to half of its previous tariff rate. In other words,
the tariff rate, which was imposed on the concerned imported goods from Turkey, was
reduced to 25 per cent on May 17, 2019 (Cbp.gov., 2019). Even after this, there was not
much difference in the production level of crude steel in Turkey.
Conclusion
The above report hence concludes that the economy of Turkey was very much
affected due to the imposition of high tariff rates on imported goods from Turkey. Even, after
the reduction of tariff from 50 per cent to 25 per cent did not make any significant difference
to the impact caused on the Turkish economy. From the trend analysis, the outcome states
that the production of steel in Turkey was decreased.

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Reference
Cbp.gov. (2019). Section 232 Tariffs on Aluminum and Steel | U.S. Customs and Border
Protection. Retrieved 18 September 2019, from
https://www.cbp.gov/trade/remedies/232-tariffs-aluminum-and-steel
Celik.org.tr. (2019). Turkish Steel Industry - Turkish Steel Producers. Retrieved 18
September 2019, from http://celik.org.tr/en/english-turkish-steel-industry/
Elsheikh, O. E., Elbushra, A. A., & Salih, A. A. (2015). Economic impacts of changes in
wheat’s import tariff on the Sudanese economy. Journal of the Saudi Society of
Agricultural Sciences, 14(1), 68-75.
Thesun.co.uk., (2019). Trump set to double aluminium and steel tariffs on Turkish imports.
Retrieved 18 September 2019, from https://www.thesun.co.uk/news/6991402/trump-
doubles-turkey-tariffs/