Relations between the two North Atlantic Treaty Organisation allies have sunk to their lowest point in decades over a number of issues including the detention of United States pastor Andrew Brunson on terror-related charges, prompting the Turkish lira to hit record lows against the dollar.
One of the hard issues affecting U.S.
While Turkey and the United States are at odds over a host of issues, the most pressing disagreement has been over the detention of USA citizens in Turkey, notably Christian pastor Andrew Brunson who is on trial on terrorism charges. The US responded by imposing sanctions on Turkey and threatening more.
Turkey exported $1.04 billion (€0.91 billion) worth of steel and $60 billion worth of aluminum to the USA in 2017, according to the Hurriyet newspaper.
He told his 57million followers: "I have just authorised a doubling of Tariffs on Steel and Aluminium with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar!"
"Nonetheless, Turkey's troubles are a further headwind for the euro and are not good news for EM assets either".
To understand how all of these pieces fit together, we'll start with some basic facts about trade between the United States and Turkey.
Mr Trump has insisted that Mr Brunson, who has lived in Turkey for more than 20 years, be released "without delay"; Mr Erdogan insists his government can not interfere with the judicial process.
"I'm not aware of any prior administration using tariffs in this way, and there's a very simple reason: because they're an incredibly blunt instrument that often can have blowback on American workers and consumers as we've seen in the China context", said Ned Price, a former Central Intelligence Agency officer who also served as a National Security Council spokesman during the Obama administration.
The central bank raised interest rates to support the lira in an emergency move in May, but it did not tighten at its last meeting.
"This is a national, domestic battle".
Turkish President Recep Tayyip Erdogan has accused the U.S. of trying to "bring Turkey to its knees through threats over a pastor".
Turkish president President Recip Tayyip Erdogan exacerbated problems on Friday when he urged citizens to sell dollars and gold in exchange for lira.
"One of our principles will be ensuring the full independence of monetary policy", Mr Abayrak said as he outlined his ministry's "new economic model".