Reflections of trade wars on Turkey: Are we ready for the new wave of protectionism?

The transformation that global economic policies have undergone in recent years has profoundly shaken trade relations between countries. In particular, the trade policies pursued by the US have caused significant economic fluctuations worldwide and have created distinct effects on emerging economies like Turkey. When looking at the historical development of Turkey-US trade relations, the impact of these policies can be clearly observed.

In an environment characterized by multidimensional problems such as the global financial crisis, fluctuations in food and commodity prices, pandemics, refugee crises, the Russia-Ukraine war, conflicts in the Middle East, environmental threats, and the effects of the climate crisis, trade wars will directly affect countries like Turkey that are integrated into the global economy through various channels such as investment, finance, logistics, and tourism. For Turkey, which finds itself right in the middle of trade wars, one of the most important questions is: Are we ready for the new wave of protectionism?

Historical Background: The Evolution of Turkey-US Trade Relations

Post-Cold War Period (1990-2016): With the end of the Cold War, the Turkey-US trade volume showed steady growth. Our entry into the Customs Union in 1996 also positively affected our trade with the US. During this period: The trade volume between the two countries increased from 5.8 billion dollars in 1990 to 17.6 billion dollars in 2016, Turkey's exports to the US diversified, primarily in textiles, automotive, and white goods, and defense industry products and agricultural products stood out in US exports to Turkey.

Protectionism and Crises During the First Trump Term (2017–2021): With Donald Trump’s “America First” policy, serious fractures occurred in trade relations. In March 2018, additional taxes of 25% and 10% were imposed on steel and aluminum products, respectively. In August 2018, the aluminum tax specifically for Turkey was increased to 50%. The Pastor Brunson crisis that occurred the same year turned into economic sanctions and tension. Turkey was removed from the F-35 program within the scope of CAATSA sanctions.

Sectoral Impact Analysis: Concrete Results of Protectionist Policies

Effects on the Steel and Metal Industry: The additional taxes imposed by the US led to a serious contraction in the Turkish steel sector; steel exports to the US, which were 1.2 billion dollars in 2017, fell to 600 million dollars in 2019. Steel producers were forced to turn to alternative markets (European Union, Middle East). Production capacity utilization rates fell from 85% to 70%.

Automotive and Sub-Industry: The automotive sector was also significantly affected by the US's protectionist policies; a 30% loss was experienced in the exports of the main automotive and sub-industry. The US market share fell from 6% to 3%. Producers turned to European and North African markets.

Textiles and Ready-to-Wear: The textile sector, one of Turkey's traditional export items, also took its share from this process; textile exports to the US fell from 3.2 billion dollars in 2017 to 2.7 billion dollars in 2020. The carpet and ready-to-wear sub-sectors, in particular, took a hit. Producers turned to the domestic market and alternative export markets.

Current Situation (2024-2025): New Balances and Opportunities

Biden Administration: Thawing and New Obstacles: During the Joe Biden era, partial reductions were made in customs duties. Reductions were applied from 25% to 15% in steel and from 50% to 25% in aluminum. However, during this period, new-generation obstacles such as environmental standards and "green economy" criteria were introduced.

Trade Policies in the Second Trump Term (Universalizing Tariffs and Their Global Effects): The trade policies that marked Donald Trump’s second presidential term have turned into a widespread economic barrier strategy targeting not only China but all countries around the world. With the “universal tariff policy” aimed at all import items, the Trump administration is taking steps that will fundamentally shake the global trade order.

Trump announced that a minimum 10% customs duty would be imposed on imports from all countries; he stated that higher-rate tariffs would be applied to countries that have a foreign trade surplus with the US. Accordingly: While a 34% tax is imposed on imports from China and a 20% tax on imports from the European Union, an additional 10% customs duty will be applied to imports from Turkey.

Furthermore, a 25% “American customs duty” has been imposed on all cars produced abroad. With this move, Trump aims to direct US companies to produce in the domestic market instead of overseas production, thereby reducing the foreign trade deficit. Indeed, as of 2024, the US has imported 1.2 trillion dollars more goods than it has exported, which has been recorded as one of the highest foreign trade deficits in history.

However, many economists point to the possible negative effects of this aggressive protectionist policy on the global economy. Warnings are being issued that the world economy, which is trying to recover after COVID-19 and is struggling with high inflation and record levels of public debt, could become even more fragile due to these new customs tariffs. It is also frequently stated that these steps taken by Trump carry the risk of fundamentally shaking the global free trade system established under US leadership after World War II.

The sectoral distribution of the new tariffs implemented by Trump within the framework of his "economic nationalism" approach can be summarized as follows:

• Steel and Aluminum: A 25% customs duty is applied to imports from all countries without discrimination.

• Automotive Parts and Industrial Products: Facing an additional 25% tax.

• Eggs, Food, and Processed Agricultural Products: Customs duties ranging from 15% to 25% are applied.

These new tariffs not only affect direct export items but also reduce the competitiveness of many of Turkey's sectors by creating indirect effects through supply chains, input costs, transport logistics, and marketing strategies. While losses in export volume in strategic areas such as steel, automotive, and food have become inevitable, Turkish firms are turning to the search for alternative markets, and some sectors are undergoing a restructuring process geared toward the domestic market.

Current Status of the US-China Trade War in 2025

In 2025, US President Donald Trump's trade policies have hardened significantly against China. In February, an additional 10% customs duty was imposed on all products imported from China, and this rate was increased to 20% in March. In response to these moves, China has imposed tariffs ranging from 10% to 15% on some products it imports from the US. In April, the tariffs imposed by the US on China were raised to as high as 145%, and in response, China began applying an additional 84% customs duty on US products. This situation has disrupted global supply chains and increased economic uncertainties worldwide.

Trump’s new economic policy, conducted through tariffs, is evaluated not only as a foreign trade strategy but also as a tool aimed at the re-establishment of geopolitical power. This situation makes it necessary for not only China, which has a significant foreign trade surplus, but also medium-sized economies like Turkey to redefine their position in the global trade order.

The Turkish Economy's Search for Adaptation and New Openings

Turkey has taken significant steps to adapt to the US's changing trade policies; the transition to electric arc furnaces in the steel sector has been accelerated. Emphasis has been placed on electric vehicle production in the automotive sector. The textile sector is transitioning to sustainable production models. A thawing in diplomatic relations is noticeable. A relative thawing has been observed in Turkey-US relations recently; progress has been made regarding the sale of F-16s. The S-400 crisis has partially lost its impact. New areas of cooperation are being developed between the two countries.

Future Perspective: Strategic Recommendations

Short-Term Measures. It is necessary to compensate for the share lost in the US market with alternative markets, review existing trade agreements, and strengthen sector-based support mechanisms.

Medium-Term Strategies: Accelerating the green transformation process, developing digital trade infrastructure, and effectively utilizing the Turkish diaspora in the US to increase trade volume are important.

Long-Term Vision. Increasing competitiveness in high-tech products, taking a greater part in global supply chains, and developing a balanced and predictable understanding of diplomacy in bilateral relations are necessary.

Conclusion: Structural Reforms for Transformation from Crisis to Opportunity

The fluctuations experienced in Turkey-US trade relations have tested our country's resilience against external shocks; they have given rise to new opportunities through adaptation policies developed against crises. However, it should not be forgotten that the dynamics of global trade are constantly changing. Sectors facing customs duties today may face environmental standards or digital restrictions tomorrow. For this reason, Turkey needs to turn toward a flexible and innovative production structure, increase R&D investments, and treat diplomacy and trade as mutually supporting tools.

With a trade volume exceeding 32 billion dollars as of 2024, Turkey-US trade relations, which have a balanced structure, are open to development in line with the announced 100 billion dollar target. However, to reach this target, it is of great importance that Turkey is prepared for the China-US trade war and implements strategic measures to protect its own industry without delay.

Turkey needs to follow the developments of this new order, which will affect its trade policies, investment profits, logistics, and supply systems, very closely. To prevent Chinese-origin products from invading the Turkish market, effective measures, including additional customs duties, must be taken, and defense mechanisms against the difficulties that Turkish exporters will face against Chinese dumping, especially in the EU market, must be strengthened.