The consequences of Donald Trump's trade war with Turkey can generate financial confusion across Europe

The consequences of Donald Trump's trade war with Turkey, which has caused a collapse in the country's currency, can generate financial confusion across Europe, experts say.

Trump's trade war in Turkey raises fears of a recession across Europe after Lira drops by 20% after the United States doubles import tariffs on Turkey's steel and aluminum

  • The warning comes after the Turkish lira fell by an astonishing 20 percent on Friday
  • The currency has been reduced by half in value during the year: it came after tariffs doubled in the United States.
  • Banks across Europe that have lent billions to Turkey can now be exposed

Harriet Dennys for the mail on Sunday

The consequences of Donald Trump's trade war with Turkey, which has caused a collapse in the country's currency, could generate financial confusion across Europe, according to experts.

The warning comes after the Turkish lira fell by an astonishing 20 percent on Friday. The currency has been reduced by half in value over the past year.

Last week's freefall came after the United States doubled import tariffs on Turkey's steel and aluminum.

The president of Turkey, Recep Erdogan, has responded harshly by saying that his country is now in an "economic war" with the United States.

Banks across Europe, which have lent billions of euros to Turkey, may now be exposed, as the companies there struggle to make the reimbursements.

The consequences of Donald Trump's trade war with Turkey, which has caused a collapse in the country's currency, can generate financial confusion across Europe, experts say.

The consequences of Donald Trump's trade war with Turkey, which has caused a collapse in the country's currency, can generate financial confusion across Europe, experts say.

In the worst case of the collapse of a European bank, there could be "contagion": other countries and banks, including those in Britain, could be in danger, raising the specter of the economic crisis that followed the banking crisis World Bank 2008. British banks are also exposed to risk, for an estimated value of £ 15 billion.

In announcing that aluminum tariffs will rise to 20 percent and tariffs to 50 percent, Trump said on Twitter that US relations with Turkey "are not good at this time," and seemed to gloat over the country's misfortunes.

He wrote: "I just authorized a doubling of the tariffs on steel and aluminum with respect to Turkey, since its currency, the Turkish lira, is rapidly sliding down against our very strong dollar."

Neil Wilson, chief market analyst at the markets platform, markets.com, said that financial markets faced their most serious threat since the debt crisis that engulfed the euro zone states following the financial crisis.

He said: "There is definitely a contagion from Turkey in emerging markets, the main risk is that this will generate a crisis in emerging markets in full development." He added: "Ultimately, it could also unleash a recession in developed countries."

The turmoil could result in further strengthening of the dollar. The pound has already been falling due to fears of an upcoming Brexit "no deal".

THE GOOD NEWS: Buying a beer in Bodrum costs £ 1 less than last year

The fall of the Turkish lira is good news, at least for British tourists: now they can save at least £ 1 on a local beer, such as Efes, in the popular Bodrum resort compared to last year.

A three-course meal for two at a mid-level restaurant now costs around £ 8.50. The bill last summer was more than £ 15.

The cost of an imported beer bottle to accompany a meal has decreased from £ 3 to £ 1.80, while a coffee costs £ 1.10 against £ 1.70 a year ago. And taxi fares have dropped from 54p per kilometer to 32p, according to data from the Numbeo cost of living website.

Three-course meal: two people in a mid-level restaurant

  • 2017: £ 15.20, 2018: £ 8.50
The good news is that the price of beer in Bodrum is £ 1 less than last year (file photo)

The good news is that the price of beer in Bodrum is £ 1 less than last year (file photo)

The good news is that the price of beer in Bodrum is £ 1 less than last year (file photo)

National beer: draft of 0.5 liters

  • 2017: £ 2.60, 2018: £ 1.60

Water bottle: 0.33 liter

Tennis court: rent for an hour on the weekend

  • 2017: £ 12.40, 2018: £ 7.60

Wine bottle: medium range

  • 2017: £ 6.50, 2018: £ 4.30

Imported beer: 0.33 liter bottle

Cappuccino

  • 2017: £ 1.70, 2018: £ 1.10

Taxi: rate for 1km

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