Turkey: Could the US damage its economy?

[NANO]

President Trump has said the US will "devastate Turkey economically" if Ankara decides to attack Kurdish groups in Syria.

Mr Trump was referring to his plan to pull US forces out of Syria, where they have been fighting alongside a Kurdish militia against the group calling itself Islamic State (IS).Turkey regards the Kurdish group as terrorists.The US president's comments drew a sharp response from Turkey

After Mr Trump's tweet, the Turkish lira dropped in value against the US dollar.It then recovered its value, suggesting that his remarks had limited impact.So how could the US damage Turkey economically - if it wanted to?

Close ties under strain

The relationship between Washington and Ankara has historically been close - politically, economically and militarily.Turkey - a Nato member - is a vital partner for the US but there have been significant strains in the partnership.These came out into the open last August, when the US slapped sanctions on Turkey over the continued detention of American pastor Andrew Brunson.

It marked a new low in relations and was a further blow to an already fragile economy.The US also aluminium that monthleading to further falls in the value of the Turkish lira - some 40% since the beginning of 2018.Turkey responded in kind, raising tariffs on cars from the US to 120%, on alcoholic drinks to 140% and on leaf tobacco to 60%.

Who does Turkey trade with?

In fact, only 5% of Turkish exports head to the US and Turkey imports only slightly more from there.Turkey's trading relationships with China, Russia and Germany are more important.

But even though overall trade with US is not as large, there are key vulnerable sectors: air transport, iron and steel and machinery - and this is where the US has chosen to target previous sanctions.Turkey has historically had a deficit in international trade, in that it imports more from the rest of the world than it exports.However, the trade gap did narrow considerably in 2018 on the back of the weakness of the lira, which made Turkey's exports more competitive and imports more expensive.