Tensions arise between Turkish and American corporations, as both sides attempt to find a compromise following increased tariffs.
In the face of a 15% tariff increase on Turkish goods by the U.S., effective from August 7, Turkish exporters are engaging in negotiations with American buyers to find a middle ground. These discussions, centred around strategic sectors such as steel, automotive, copper, textile, and apparel, aim to secure more favourable trade terms and tariff-sharing arrangements.
Mustafa Gültepe, the president of the Turkish Exporters Assembly (TİM), has emphasized the need for Turkish exporters to remain competitive despite rising costs, given the price-sensitive nature of the U.S. market. Despite the tariff hike, Turkey retains a favourable tariff status, known as the "white list," which exempts it from the highest tariffs imposed on other countries.
Gültepe believes that Turkey's relatively low tariff rate presents an opportunity to increase its share in the U.S. market. Some U.S. clients have proposed to split the additional tax burden with Turkish exporters, a proposal that is gaining traction as a solution to mitigate the financial impact of the new tariffs for both parties.
The Turkish Trade Minister did not provide data for the current year's exports to the U.S. beyond July, but it is evident that Turkey's growing trade ties with the U.S. are reflected in its increasing exports. In July 2021, Turkey's exports to the U.S. amounted to $1.57 billion, making it the third-largest export market for Turkish companies.
The Turkish Exporters Assembly (TİM) is a body representing Turkish exporters in discussions regarding the impact of U.S. tariffs. Gültepe has noted that the uncertainty surrounding Trump's trade policies has made long-term planning difficult for both sides. However, he remains optimistic about Turkey's ability to maintain price competitiveness in the U.S. market.
Some Turkish firms are accepting the proposal to share the cost of the new tariffs with U.S. clients, while others are still negotiating terms that protect their competitiveness and promote sustained trade growth. The priority, according to Gültepe, is a fair, predictable, and sustainable trade framework benefiting both exporters and American buyers.
Turkey aims to increase bilateral trade volume with the U.S. to $100 billion, signalling a strategic push toward deeper economic cooperation. This ambition is echoed in the growing exports to Germany, amounting to $1.97 billion in 2021, and to the U.K., amounting to $1.66 billion in the same year.
However, the cumulative effect of tariffs in certain sectors could push total duties as high as 30% for Turkish exporters. U.S. clients are concerned about the tax increase, as they will have to raise their prices as well, contributing to ongoing inflationary pressure in the U.S.
Despite these challenges, Gültepe believes that the strength of mutual investments and the balanced nature of trade relations provide a strong negotiating position for Turkey. The ongoing negotiations reflect a strengthening mutual dialogue and cooperation in trade relations between Turkey and the U.S.
The Turkish Exporters Assembly (TIM) is actively seeking a solution to mitigate the financial impact of the new tariffs with American buyers, particularly in sectors like finance and industry. Mustafa Gultepe, the president of TIM, has proposed a tariff-sharing arrangement as a potential way for Turkish exporters to maintain their competitive edge and continue growing their share in the U.S. market.
