ISTANBUL — In the wake of President Donald Trump’s recent implementation of tariffs, Turkish business leaders and economists are finding potential benefits amidst the economic challenges. Turkey, the world’s 17th largest economy, received a 10% tariff imposition from the U.S., relatively lower than many other nations, which may provide Turkey with a competitive edge under the new tariff policies.
Finance Minister Mehmet Simsek commented that Turkey’s economic reliance on domestic demand rather than exports will likely mitigate the impact of these tariffs. “Turkey maintains free trade agreements with 54 countries outside the U.S. and EU,” he noted, highlighting that “68% of our exports are directed to these countries.” The customs union with the European Union eliminates trade restrictions, enhancing Turkey’s trade capabilities.
On Friday, Simsek discussed how Turkey’s “comparatively low tariff rate might offer a competitive advantage in specific sectors.” Can Selcuki, managing partner of Istanbul Economics Research, identified potential issues for Turkey through intermediate goods supplied to entities exporting to the U.S. that face higher tariffs, like the EU, which faces a 20% tariff.
In 2024, Turkish exports to the U.S. totaled $16.7 billion, with a nearly equal import volume from the U.S., according to the Office of U.S. Trade Representative. This figure is significantly lower than Turkey’s exports to the EU, which President Recep Tayyip Erdogan stated amounted to $108.7 billion in the previous year.
Selcuki explained, “Any reduction in the EU’s competitive position affects Turkey because Turkey supplies intermediate goods essential for the final EU products.” Despite this, the evolving global trade scenario might present new opportunities for Turkey.
“A substantial amount of manufacturing will need to be reallocated, prompting a reevaluation of supply chains,” Selcuki added. “With its robust manufacturing sector and proximity to the EU, Turkey is well-positioned to capitalize on this shift in supply chain strategies.”
President of the Istanbul Chamber of Commerce, Sekib Avdagic, proposed that companies based in nations facing higher tariffs, like China, might opt to establish operations in Turkey to leverage lower export rates to the U.S. “Turkey’s ability to seize this opportunity hinges on its strategies to enhance export sectors and explore new markets,” he mentioned.
Gurkan Yildirim, leader of the Turkish Young Businessmen Association, emphasized that “should Turkey offer a conducive investment environment, it stands to attract investments from these companies.” Selva Bahar Baziki, an economist with Bloomberg Economics in Ankara, remarked that even indirect trade through other countries accounts for less than 2% of Turkey’s GDP by U.S. demand.
The industries most at risk from tariff exposure include those involved in metals and textiles. Addressing the Turkish lira’s recent volatility and subsequent inflation, Baziki concluded that tariffs would generate “no inflationary pressure from exchange rate shifts related to trade policies.”