In a tweet, Trump cited the decline in Turkish currency as justification for increasing tariffs to 50 percent on Turkish steel and 20 percent on Turkish aluminum.
Last week, Erdogan called on Turks to convert their foreign currency and gold into Turkish lira to help the currency.
There was no sign on Wednesday that the USA and Turkey were able to make any progress in resolving a diplomatic impasse after a delegation from Ankara met with top State Department officials.
Prior to Trump's announcement, the Turkish lira fell to its lowest point ever against the US dollar on Friday. To do that, they have to sell lira - worsening the rout.
The Trump administration's original move in March to raise tariffs on most steel and aluminum imports was proposed to safeguard USA jobs against overseas rivals.
Exchange-rate volatility not only complicates loan repayments, it also drives inflation higher and erodes the value of existing loans in the local currency. He said this would be Turkey's response "to those who wage economic war against us".
USA investors shifted focus from strong corporate earnings to the rout in Europe, sending the major stock-market indexes lower. The U.S. was Turkey's biggest export market for steel past year, though exports have fallen since.
Economic experts believe the sharp fall of the lira is mainly because of concerns about the government's economic policies.
The Turkish lira fell 13 percent to 6.51 per dollar.
President Trump's discarding of the Iran nuclear deal is a point of contention, as well, as almost half of Turkey's oil imports come from Iran, meaning new sanctions against Iran come back and hurt the Turkish economy as well. There wasn't much Eurozone data released over the past week but the few reports we had were far from impressive as factory orders and industrial production in Germany tumbled. According to a source in Erdogan's office, the two said they were pleased with the positive direction in their economic and trade ties and with the ongoing cooperation in the energy and defense sectors.
Turkey and the USA are now experiencing rocky relations following Washington's imposition of sanctions on Interior Minister Suleyman Soylu and Justice Minister Abdulhamit Gul for not releasing Brunson.
The lira has now lost over a third of its value against both the dollar and the euro this year, with the currency battered by both concerns over domestic economic policy and the political situation.
US President Donald J. Trump and Turkeys President Recep Tayyip Erdogan (R) arrive for a family picture of Nato Summit in Brussels, Belgium, 11 July 2018.
New Finance Minister Berat Albayrak - Erdogan's son-in-law - acknowledged that the central bank's independence was critical for the economy, promising stronger budget discipline and a priority on structural reforms. A delegation of Turkish officials held talks with their counterparts in Washington this week but there was no sign of a breakthrough.
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